Preamble

The House met at half-past Two o'clock

PRAYERS

[MADAM SPEAKER in the Chair]

NEW WRIT

Ordered,
That Madam Speaker do issue her warrant for the Clerk of the Crown to make out a new writ for the electing of a Member to serve in this present Parliament for the borough constituency of Dudley, West in the room of John Graham Blackburn Esq., deceased.—[Mr. MacKay.]

Oral Answers to Questions — TRADE AND INDUSTRY

Post Office

Mr. Dowd: To ask the President of the Board of Trade what plans he has for the commercial future of the Post Office.

The President of the Board of Trade and Secretary of State for Trade and Industry (Mr. Michael Heseltine): The Post Office operates several businesses. We are actively engaged in widening the opportunities for Post Office Counters and we are helping to automate their services. We will announce any plans to change the present arrangements governing the remainder of Post Office activities as appropriate.

Mr. Dowd: Despite the Secretary of State's failure to convince all his own Back Benchers, let alone the British people, of the need to privatise Royal Mail, will he confirm that he will not allow his personal pique or vanity to sabotage a prosperous future for the Royal Mail within the public sector? If he cannot give such an assurance, will he make way for those who can?

Mr. Heseltine: I doubt very much whether the Post Office would want me to make way for the Labour party as it will remember that, faced with the dilemmas that I face, it was the Labour party's decision to cut the capital expenditure programmes of the Post Office by 30 per cent.

Sir Wyn Roberts: Will my right hon. Friend comment on the decision of the Union of Communication Workers to take industrial action against what they call back-door privatisation?

Mr. Heseltine: I believe that industrial action against back-door or front-door privatisation is extremely unwise. I understand that my right hon. Friend the Member for Conwy (Sir. W. Roberts) is concerned about the possible use of industrial action to frustrate the opportunities for the management of the Post Office to transfer individual

post offices from the public to the private sector. Where such post offices have been so transferred, that has been extremely successful.

Ms Hoey: Can the Secretary of State tell us very simply why he will not allow the Treasury rules to be changed—the changes could receive all-party agreement and be put through the House very quickly—to give the Post Office the commercial freedom that everyone knows it needs and deserves?

Mr. Heseltine: Because we are following the precedent of the Labour party in power which managed to cut the capital programmes of the Post Office by 30 per cent. If that was not enough, Labour cut the Electricity Generating Board capital programmes by 25 per cent. for exactly the same reason. In power—something Labour has now forgotten all about—Labour faced the same disciplines that we are facing.

Mr. Page: Now that the plans to privatise the Royal Mail have been dropped and, with them, the removal of commercial restrictions on the Post Office, does my right hon. Friend agree that instead of the taxpayer receiving the money and benefit from the sale of the Post Office and the Royal Mail and the annual income from corporation tax, the taxpayer may well have to find money to finance investment and pay to fight increasing commercial competition?

Mr. Heseltine: Those arguments are very powerful and they are the underlying arguments that have enabled the Government to privatise industry after industry, to turn state-run monopolies into world-class companies and to set a pace-setting programme across the entire world which Governments of all political persuasions are now copying.

Dr. John Cunningham: Why does the right hon. Gentleman walk up a blind alley on the future of the Post Office? Does he not recognise that the British National Oil Corporation—until it was dismantled by the right lion. Gentleman and his colleagues—operated successfully outside the public sector borrowing requirement and that, until recent weeks, British Nuclear Fuels also operated successfully outside the PSBR until he brought it back within the PSBR?
Presumably, if the right hon. Gentleman believes that the Post Office cannot be successful in the public sector, he is condemning not only the Post Office but British Nuclear Fuels plc, too. Why does he not seek, with his hon. Friends and with the Opposition, an agreed way forward which will guarantee success for the Post Office and for Britain? That course is open to the right hon. Gentleman—why does he spurn it?

Mr. Heseltine: For precisely the reason that the Labour party could find no way of doing that when it was in office. If it is so simple, why did the Labour Government cut investment programmes by 30 per cent.?

Mr. Tredinnick: Will my right hon. Friend indicate what competition the Post Office faces, particularly from abroad, and will he say something about the fate of the letter post and whether it is declining?

Mr. Heseltine: My hon. Friend raises the right questions. Increasingly, private sector American and Australian owned companies are competing with the


Royal Mail. The fax machine and the bike boys are eating into its marketplace. A proliferation of private sector companies which are subject to the disciplines of their balance sheets are competing with the Post Office. As the whole House knows, it is extremely difficult to impose on a public sector organisation the disciplines necessary to ensure that taxpayers' money is not used unfairly to compete with the private sector. Plenty of Opposition Members who have British private companies in their constituencies would be the first to complain if they felt that those companies were being subjected to unfair competition.

Single European Market

Mr. Salmond: To ask the President of the Board of Trade what measures he is taking to ensure that businesses are able to compete effectively within the single European market; and if he will make a statement.

The Parliamentary Under-Secretary of State for Trade and Technology (Mr. Ian Taylor): We have established a single market compliance unit which, alongside the trade barriers strategy, helps industry to tackle single market problems and conducts sectoral studies. We are assisting the Commission in its efforts to improve complaints procedures and are pushing successfully for closer co-operation between enforcement officials in the Community.

Mr. Salmond: Can the Minister identify the precise mechanism by which having a part-time chairman at £450,000 and a 75 per cent. salary increase for a chief executive will enable British Gas to compete more effectively in the single market? Is there not a contrast between the President of the Board of Trade's specific support for the company and the Prime Minister's general condemnation of excessive salary increases, or is the common connection that neither of them intends to do anything about it, presumably on the ground that the Tory party helps those who have already helped themselves?

Mr. Taylor: The hon. Gentleman's bile has obscured his judgment of the success of the policy and the way in which British Gas has helped its customers over the past few years. The salaries of chairmen of such companies on the stock exchange is a matter for the directors involved, as the chief executive himself has said. We are concerned to improve the quality of service to customers. In many privatised utilities, that is exactly what happens. In the sphere for which I am directly responsible, we must look at the tremendous success of British Telecom since privatisation and the at improvement in services to customers. Prices have fallen by 35 per cent. Why does the hon. Gentleman not talk about those successes rather than ranting and raving?

Mr. Quentin Davies: May I congratulate my hon. Friend and my right hon. Friend the President of the Board of Trade on their remarkable success in persuading our European partners finally to open the telecommunications market in the single market by 1998, which is a great success about which, needless to say, the media have said almost nothing? May I ask my right hon. and hon. Friends to build on that success by now pushing for a single market in energy and forcing the monopolistic

owners of pipelines and electricity grids elsewhere in the single market to open those networks to competition as soon as possible?

Mr. Taylor: My hon. Friend has noticed the Government's tremendous success in the Telecommunications Council on Thursday evening, when we persuaded recalcitrant Community colleagues to agree to liberalising infrastructure as well as services by 1 January 1998. I should point out to Opposition Members that the problem for several of those countries was that they were not sufficiently committed to liberalisation. A party that is not committed to liberalisation cannot envisage the true merits of the information superhighway.
On my hon. Friend's second point, we are very much in favour of a single market in energy, and it is overdue. My hon. Friend the Under-Secretary of State for Industry and Energy is working hard to obtain agreement on this across the Community.

Mr. MacShane: Is the Minister aware that one of the greatest single hindrances for British companies seeking to operate in Europe is the high cost of electricity for large-scale industrial users in this country? Electricity prices for that group of users have risen by more than 50 per cent. in the past five years, while they have fallen in comparable European countries; in pence per kilowatt the cost is higher in the United Kingdom than in France, Italy, Belgium and the Netherlands. Will the Minister tell the chairmen of the privatised companies to stop lining their pockets and to produce electricity at prices which will allow British firms—particularly those in the steel and chemical industries—to compete effectively in Europe?

Mr. Taylor: The hon. Gentleman's comparative figures are not entirely correct, but if he persists in his view perhaps he will write to me about the details.
The point is that larger users in particular are capable of negotiating contracts. British industry is competitive in the European Union, regardless of the price levels that the hon. Gentleman mentioned, specifically because we have the right competitive background for British industry to flourish. That is why it is doing well in the European single market, and why our partners in the European Union regularly view the Government's policies as those that they should follow.

Exports

Mr. Batiste: To ask the President of the Board of Trade when he will next meet the Confederation of British Industry to discuss exports.

The Minister for Export Trade (Mr. Richard Needham): With other DTI Ministers, I regularly meet the CBI to discuss a wide range of issues, including exports. Underlying export volumes have risen by 12 per cent. over the last year and now stand at record levels.

Mr. Batiste: Does my right hon. Friend agree that the unprecedented success of British companies in exports is due at least in some measure to the success of small British companies in re-exporting products to rather difficult markets—companies such as those in my Leeds constituency involved in re-exporting musical instruments? Will he consider ways in which his


Department could help such companies to expand their presence at international trade fairs through joint ventures?

Mr. Needham: A recent survey showed tremendous confidence among Leeds business men in the export market, for which they deserve great credit.
As my hon. Friend knows, this is the only recovery since the war—and I mean the Boer war—in which the trade deficit has actually declined. British exports are now at the level that they reached in the mid-1980s, and the decline of the British percentage share worldwide has ceased. That is because of the tremendous success of the Government's policy, and the dynamism of the British manufacturing base.

Mr. Austin Mitchell: Do not the improvement in British exports since devaluation and the even greater improvements in exports outside Europe, where the devaluation has been greater, indicate the need for a competitive exchange rate to boost exports? Would not the best way of providing encouragement be to offer Eddie George on a free transfer to the Bundesbank instead of allowing him to yammer on about putting up interest rates—and therefore the pound—every time recovery stirs?

Mr. Needham: The hon. Gentleman asks enough questions over a month to know the answer to that himself. The fact is that Britain's share of world trade in manufacturing stopped declining in the mid-1980s, having-as the hon. Gentleman knows—declined consistently for most of the century. That cannot be purely to do with our leaving the exchange rate mechanism. The real factor is that Britain's exports are now more competitive and our productivity is increasing, as is our quality, mainly because the Government have managed to attract vast amounts of foreign investment into this country and to improve the competitiveness of British industry.

Mr. Garnier: My right hon. Friend mentioned the Boer war. Will he encourage the CBI and its members to export vigorously to the Republic of South Africa—a country that needs all the trade that it can get, but trade that will benefit British industry as well?

Mr. Needham: My right hon. Friends the Prime Minister and the President of the Board of Trade have already taken large missions to South Africa and I intend to add to those twice next year. I think that British business understands the importance of South Africa and the opportunities there, and that we shall take every opportunity to exploit those opportunities.

Motor Industry

Mr. Burden: To ask the President of the Board of Trade what assessment he has made of the contribution of co-operation between employers and employees to the performance of the motor industry.

The Minister for Energy and Industry (Mr. Tim Eggar): In recent years, both existing vehicle manufacturers and inward investors have transformed working practices. That has led to very significant

improvements in productivity and quality. Those changes have also fed down the supply chain to component suppliers.

Mr. Burden: Surely the Minister accepts that the hallmark of the really successful motor manufacturers recently, such as Rover in my constituency, has been the fact that they work closely with the trade unions representing the work force, that they value collective agreements and realise their validity, and that they have conditions of service well above the social chapter minima and low-pay thresholds. Does that not show just how bogus is the Government's approach of aclvocaling low wages and union bashing?

Mr. Eggar: I confirm that the number of working days lost through industrial action has decreased dramatically since 1979—from 29.5 million days then to 649,000 days last year. That is a credit to the industrial relations changes brought about by the Government which the Labour party consistently opposed.

Mr. Anthony Coombs: As the motor industry makes such a major contribution to manufacturing industry in the west midlands, which itself accounts for more than a third of exports from Britain, is it not encouraging that a recent CBI survey of the west midlands shows that no fewer than 80 per cent. of companies expected an increase in sales in the next three years and 60 per cent. expected an increase in exports? Would that not be jeopardised by the huge rise in business taxation which the Opposition expect will increase by no less than 50 per cent. at a stroke?

Mr. Eggar: My hon. Friend is absolutely right. The worst thing that we could do in terms of inevitably reversing the present trend towards increased competitiveness by British industry would be to take on board the burdens of minimum wages and joining the social chapter, which is exactly what the Opposition advocate.

Small Businesses

Mr. Jamieson: To ask the President of the Board of Trade how many small businesses were set up in Devon and Cornwall last year; and how many went out of business.

Mr. Ian Taylor: The figures for VAT registration and deregistration in 1993 are not yet available, and they would be the best guide. Commercial sources show a decrease in company failures in the south-west during the first nine months of 1994 compared with the same period in 1993.

Mr. Jamieson: Is the hon. Gentleman aware that in Devon and Cornwall since the mid-1980s 21,000 people have lost their jobs in defence-related industries, many of them small businesses, with a total loss of £500 million to the local economy? When will the hon. Gentleman announce new measures to assist small businesses in Devon and Cornwall, and when will he take the interests of the south-west seriously?

Mr. Taylor: The hon. Gentleman should know that we do take the interests of the south-west seriously, as any visit to the Government office in the south-west will show. In addition, the help that we are giving through Business Links particularly helps smaller companies in periods of adjustment or expansion. We are working with


the defence industries and through the European Union's Konver programme. However, the hon. Gentleman might think closely about the Labour party's policy towards defence as that would be the biggest job destruction programme going.

Sir Peter Emery: Does my hon. Friend agree that unemployment in east Devon, as in most of Devon, is among the lowest in the United Kingdom and that the investment of overseas companies in Devon and Cornwall is high and based on small industries which have grown in order to attract such investment? Will my hon. Friend do everything possible to continue the support that we have had from the Department of Trade and Industry to ensure that such investment continues?

Mr. Taylor: I am grateful to my right hon. Friend for being positive, which is in the interests of the region. The Government are giving considerable help in the form of DTI assisted area status, particularly for Plymouth where the inward investment office will be. As I have said, there is the status 2 objective for the European Union, particularly for the urban areas, the Konver 1 and 2 programmes and Business Links seeking to ensure that small companies, to which my right hon. Friend referred, receive the best possible advice. That is a story of considerable assistance; if Opposition Members did more to highlight it, they might provide companies with more incentives to move into the area.

Mr. Bell: That is a story of complacency rather than assistance. When the hon. Gentleman talks about the south-west and the small business man, will he refer to the famous memorandum of the famous John Maples, which states clearly that privatisation has not been popular and that the small business man in particular feels let down? That view was immediately echoed by the hon. Members for Upminster (Sir N. Bonsor), for Bridlington (Mr. Townsend), for Bexleyheath (Mr. Townsend), for Aldridge-Brownhills (Mr. Shepherd) and for Dover (Mr. Shaw). None of those Back-Bench Members supports the Minister, and Mr. Maples does not support the Minister, so who does?

Mr. Taylor: The Minister is not looking for support for something that he is confident that he is doing right. That will be self-evident, and support will flow from the success of the economy, including that of the south-west. There is no question but that the south-west is benefiting from the Government's policies across the board, which have stimulated growth among smaller companies. All the figures now emerging from the banks show a rising number of business start-ups and an increase in the total stock of businesses in each of the first three quarters of this year. Those are the statistics. What I said earlier shows that we are also providing a framework for further support to allow those companies to grow from small into medium-sized businesses. That is actually rather good progress.

Mr. Streeter: Has my hon. Friend been able to assess the adverse impact on all small Devon and Cornwall businesses supplying goods and services to the dockyards if a future Labour Government were to comply with the policy of the Labour party conference and scrap Trident, thus destroying the dockyards?

Mr. Taylor: My hon. Friend the Member for Plymouth, Sutton (Mr. Streeter) has spoken up long and

loud in the interests of his constituents, and I know that they are now paying close attention to the support that the Government have given him. There is no doubt that Labour policy on defence, especially on Trident, would be devastating for people in and around the dockyards. Those problems would continue and get worse if ever a Labour Government came to power—which is one reason why people in the south-west would be well advised to read the Labour party's defence document, especially on Trident.

Coal Industry

Mr. Illsley: To ask the President of the Board of Trade what proposals he has for payments to mineworkers on the transfer of the coal industry to the private sector.

The Parliamentary Under-Secretary of State for Industry and Energy (Mr. Charles Wardle): I have no such proposals.

Mr. Illsley: The Minister may be aware that there is increasing speculation among mineworkers employed in the coal industry that their contracts of employment will be terminated when they are required to apply for jobs in the private sector. Can he tell us whether that will happen, and whether any payment will be made to mineworkers invited to transfer to the new privatised coal industry? Will there be redundancies, with fewer men employed in the industry in future?

Mr. Wardle: Miners transferring to the private sector will not be redundant and they will transfer under the well established Transfer of Undertakings (Protection of Employment) Regulations, which will cover their contractual rights, including those relating to redundancy levels. The hon. Gentleman has always been perfectly open about his past employment with the National Union of Mineworkers, but it is a bit rich for him to suggest that an industry which has received nearly £20 billion from the taxpayer since 1979 should ask the taxpayer to dip further into his pocket and give miners a parting gift when they sensibly join the private sector.

Mrs. Peacock: Will my hon. Friend confirm that one of the requirements of the privatisation process was that companies bidding would provide redundancy finance if and when required?

Mr. Wardle: My hon. Friend is right; that is the cover provided by the TUPE regulations. When the Minister of State made his announcement last month about the preferred bidders he made it clear that those companies were well funded and able to meet their liabilities. Thanks to the TUPE regulations, they will do precisely that—when necessary.

Telecommunications

Mr. Martyn Jones: To ask the President of the Board of Trade what further discussions he has had with the National Consumer Council about the level of service provided by telecommunications companies.

Mr. Ian Taylor: Although my officials met the National Consumer Council following its September 1993 report, "Paying the Price", which covered the work of all the utility regulators, the level of services provided by


telecommunications companies is primarily monitored by Oftel. Oftel deals directly with representations from consumers.

Mr. Jones: I am glad that the Minister has mentioned the NCC report, "Paying the Price", as it says that since privatisation the cost of connecting a telephone has increased by 20 per cent. How does he justify that?

Mr. Taylor: Matters of interconnection are now being assessed by Oftel, which has said that a report will be published early next month. Oftel has kept continuously under review the question of whether the consumer is best protected and the necessity, in a highly complicated sector, of providing a proper balance between access to BT and enabling it to perform properly as a company.
The key point to bear in mind, however, is that since the liberalisation of BT call costs have been reduced by 35 per cent. in real terms. Cheap communications are important not only to customers but because they will enable the information super-highway to grow.

Mr. John Marshall: Does my hon. Friend agree that many pay phones did not work when BT was in the public sector, whereas many more do so today? Does not that show that competition and privatisation give a better service to the consumer?

Mr. Taylor: My hon. Friend is quite right: shareholders are not known to vandalise telephone boxes. Since competition began, universal service provision—a matter of considerable debate 10 years ago during the phase of liberalisation, which was not supported by the Labour party—has increased. There are now more telephone boxes—most of which now work—and more people have a telephone. That is a tremendous success for a policy, which the Labour party could well reconsider—with guilt for not supporting it.

Mr. Nigel Griffiths: How can the Minister be satisfied with Oftel's record when fewer of our citizens have phones in their homes than those of France and Germany? Why do British customers pay higher connection charges than most of our competitor countries, and should not the regulator be given powers to reduce connection charges to the French and German levels of under £30?

Mr. Taylor: The hon. Gentleman makes unreasonable comparisons with other countries' telephone systems. [Interruption.] Opposition Members should listen to what I have to say. I attended a European Telecommunications Council meeting last Thursday, at which Minister after Minister complimented us on the way in which liberalisation had given the British public an excellent telephone network based on competition.
Each of the cases that Oftel is investigating contains detailed proposals backed by reports, and another report in December will propose protection for the consumer. As a result of liberalisation, the British public has received a better quality of telephones and lower prices. Where there are problems, BT and the other new companies have offered special bargains such as the low-pay tariff. Those are excellent moves by a competitive market that is responding to customer demand.

Mr. Fabricant: Is my hon. Friend aware that this country now has more digital links than France or Germany, that long distance and international phone calls are cheaper here than in France or Germany and that—to

be precise—less than 30 per cent. of call boxes worked before privatisation, whereas now more than 95 per cent. work?

Mr. Taylor: Britain is the best place in the European Union for international businesses to conduct their business. It is interesting that, from Paris, it is cheaper to phone somewhere else in France via New York than it is to use France Telecom. That is a remarkable fact, and it would not occur in this country. We have just found a United States equivalent for telephone purposes, and there is now the possibility of extremely cheap lines across the Atlantic. That again will assist British business.

Steel Industry

Mr. Roy Hughes: To ask the President of the Board of Trade what recent discussions he has had with his European counterparts concerning pricing policy in the steel industry.

Mr. Eggar: The Government have had no such discussions with Community member states. Decisions on steel prices are a matter for the commercial judgment of the companies concerned.

Mr. Hughes: Does the Minister recognise that the problems of state subsidies and unfair practices have temporarily abated because of the upturn in demand for steel? Nevertheless, when the downturn comes we shall be back to square one. Is not there some justification for the widespread feeling among steel workers that the Government have put up only a sham fight on their behalf?

Mr. Eggar: I simply do not accept that. I pay tribute to the management and work force of British Steel and of the other steel companies for the dramatic change that has been achieved since privatisation. I know that the hon. Gentleman's constituency has been through a period of change. He now has a world-class plant in his constituency that is producing a record amount of extremely high quality steel.
It is well known that the Government strongly opposed a number of European Union proposals. Last December, however, we accepted, a package of six article 95 cases. We are discussing a particular article 95 case, the EcoStahl case, with the Commission and the German and French Governments, and at the same time we are keeping British Steel and the British Independent Steel Producers Association—BISPA—closely informed of progress. It is a difficult issue. We are aiming to achieve equivalence between the present article 95 proposals and the December 1993 proposals.

Gas Bill

Mr. David Evans: To ask the President of the Board of Trade how much the average domestic gas bill is likely to fall as a result of the effects of the Gas Bill.

Mr. Eggar: Janice will be happy to know that she is likely to be able to benefit from about a 10 per cent. cut in her gas bills as a result of competition.

Mr. Evans: I thank my hon. Friend for that reply. Will he confirm that since privatisation gas prices have fallen by 23 per cent.? I know that my hon. Friend likes to have instant control of himself, but does he agree that Bambi has already lost control of the lot opposite? Does he also



agree that—[HON. MEMBERS: "Reading".]—we have not heard much about the 50 per cent. pay rise that Bambi got when he became leader of that lot on the Labour Benches?

Mr. Eggar: I can answer yes, yes, yes and yes.

Mr. Harvey: When the Government introduce a competitive market into the gas supply industry, what protection do they intend to offer small-volume consumers in areas remote from the sources of supply against the higher economic costs of supplying gas to them? Upon whom will the cost of restructuring the industry fall?

Mr. Eggar: As the hon. Gentleman knows, a number of issues lie behind that question. In the coming months, a regional differential in prices will be introduced that will differentiate region by region as opposed to urban area as against rural area. We therefore do not expect transportation charges to differ to the extent implied by the hon. Gentleman. We will publish full details in the proposed Bill and in the accompanying licence of the various obligations that will be placed on the competitor companies to British Gas. I am sure that the hon. Gentleman will be reassured by that information. I know that his party is in favour of gas competition and I look forward to working with him.

Mr. Wilson: The country is now well aware that the chief executives of British Gas have awarded themselves grotesque pay rises. The chief executive has been awarded an increase of £205,000 a year. Will the Minister confirm that, by remarkable symmetry, in the current year his Department has cut the grant to the Gas Consumers Council by £209,000? Will he further confirm that there could be no more eloquent commentary on the concern felt by his Department and the Government for the consumer as opposed to their worship of private greed?

Mr. Eggar: Why does not the hon. Gentleman pay credit to British Gas for a reduction of 23 per cent. in real gas prices? Why does he not follow the line taken by the shadow energy Minister, who has welcomed the Government's announcement about ending British Gas's monopoly, which will therefore increase the benefits of competition that will be enjoyed by consumers?

VSEL

Mr. Mans: To ask the President of the Board of Trade what representations he has received concerning the proposed takeover of VSEL by GEC.

The Parliamentary Under-Secretary of State for Corporate Affairs (Mr. Jonathan Evans): It is for the Director General of Fair Trading to consider this proposed merger and to advise my right hon. Friend the President of the Board of Trade under the Fair Trading Act 1973 whether the merger should be referred to the Monopolies and Mergers Commission. All representations received by the Department of Trade and Industry are being forwarded to the Office of Fair Trading.

Mr. Mans: I congratulate my hon. Friend on being appointed to his new post. Bearing in mind the near monopoly that would result if this bid were allowed to go

ahead, will my hon. Friend give serious consideration to submitting it to the MMC, should the Office of Fair Trading consider that that is the right way to proceed?

Mr. Evans: I am grateful to my hon. Friend for the warmth of his welcome. At this stage, it is the job of the Director General of Fair Trading to investigate those cases, but he is willing to receive views from all interested parties and I am sure that my hon. Friend will pass his observations to him.

Mr. Davidson: Does the Minister accept that people are anxious about the possible takeover of VSEL not only by GEC but by British Aerospace, particularly about the impact that it might have on Yarrow's on Clydeside? Would not it be far better for the Government to make it clear now that they will refer neither bid or both bids, but will not discriminate in favour of one bid as opposed to another?

Mr. Evans: As I have already said, at this stage it is a matter for the Director General of Fair Trading, but I am sure that the competition authorities will pay close attention to all the views expressed. I have no doubt that the hon. Gentleman will join my hon. Friend the Member for Wyre (Mr. Mans) in making representations to that quarter.

Mr. Nicholas Winterton: I wish to advise the House that Avro International, the regional jet division of British Aerospace, is located on the periphery of my constituency and is therefore a vital employer in the Macclesfield borough. If GEC succeeds in taking over VSEL, it will create a virtual monopoly in shipbuilding, which cannot be good for the defence pound and its purchasing capacity. Will my hon. Friend take on board the fact that many Conservative Members are strongly opposed to GEC's bid and will do everything possible, in representations to the Government and the Office of Fair Trading, to point out the problems that would result if GEC were successful?

Mr. Evans: My hon. Friend is an experienced Member of the House and will therefore appreciate that, at this stage, I cannot discuss specific issues raised by the merger. He will have heard the observations that I made to other hon. Members and I am sure that the strength of opinion that he has expressed will be made clear to the Director General.

Dr. Moonie: Surely the Minister is aware that the bid has considerable repercussions for other parts of the defence sector and that there must be a question mark over whether a successful company like VSEL should be taken over by either of the potential bidders. My hon. Friends and I find it incredible that his Department is prepared to make no recommendation whatever to the Office of Fair Trading, nor to say that it will refer both bids to the Monopolies and Mergers Commission if the need arises. Is not there a role for the Government, other than holding their jackets?

Mr. Evans: The hon. Gentleman's question shows a remarkable lack of understanding of the process of considering these matters. The Director General of Fair Trading makes a recommendation to the President, rather than the other way round. Once that recommendation has been made, the matter will fall for decision within the purview of my right hon. Friend the President, but not until that time.

Manufacturing Industry

Mr. Pawsey: To ask the President of the Board of Trade what is the estimated size of the United Kingdom manufacturing industry measured by its contribution to the gross national product in the current year; and what it was in 1991.

Mr. Heseltine: The share of manufacturing in GDP was 21.9 per cent. in 1991 and 21.7 per cent. in 1993. Since 1991, manufacturing output has increased by 5.7 per cent.

Mr. Pawsey: I thank my right hon. Friend for that helpful reply. Notwithstanding earlier comments made in the Chamber, will he join me in congratulating GEC-Alstom on its outstanding success in winning overseas orders, often in the face of intense competition? Will he further congratulate GEC on the quality of its management, its well-trained and well-motivated work force and the quality of the products that are made in my constituency of Rugby?

Mr. Heseltine: My hon. Friend is right to draw the House's attention to the excellent products that are made in his constituency. He will understand if I do not go too far down the road that he invites me to take because, in the context of the dialogue in the House this afternoon, I should not want to indicate that I am in any way prejudiced in matters that might come to my attention.

Dr. Cunningham: Instead of comparing 1991 with 1993, why does not the right hon. Gentleman tell the House about the contribution of manufacturing industry and its decline over the past 15 years? Why does not he admit that, in 1979, manufacturing industry contributed 28.5 per cent. to our gross national product whereas, by last year, its contribution had fallen to 21.7 per cent.—a fall of almost 25 per cent.—while at the same time the manufacturing industries of our competitors in Germany, Japan and the United States of America were all growing? That is a measure of the failure of his policies.

Mr. Heseltine: When the right hon. Gentleman has had time to do some more homework, he will find that manufacturing, as a share of the economy in this country, has been falling for the past 40 years. He will also find that it has been falling consistently in our competitor economies. If he really wants to understand what is happening in some of the world's most successful economies, I should tell him that in Hong Kong manufacturing now makes up only 15 per cent. of the economy. The right hon. Gentleman must understand that the arcane ideas that one can fossilise an economy of yesterday's industries are totally out of date.

Sir Michael Grylls: Does my right hon. Friend not find it strange that the Opposition are incapable of paying compliments to people who work in British industry? I understand that the British machine tool industry has announced that it has achieved an 18 per cent. increase in its exports and that we shall have a favourable balance of trade in machine tools. Should not the Opposition be pleased about that, rather than attacking us?

Mr. Heseltine: My hon. Friend is right that Opposition Members do not give the support to British industry and British commerce that they deserve. In order to help them on their way, perhaps they will join my right hon. and hon. Friends and I in welcoming today's excellent news

for Humberside—that, as a result of a £10 million grant from my Department, Courtaulds has announced that approximately £100 million will be invested to develop a new textile fabric based on tensel, which is one of the most exiting innovations that has taken place in that industry for many years.

Telecommunications

Ms Church: To ask the President of the Board of Trade what assessment he has made of the validity of the asymmetry principle in relation to telecommunications policy.

Mr. Ian Taylor: There is no asymmetry, as explained in the Command Paper on creating super-highways in the United Kingdom, which was published yesterday.

Ms Church: Does the Minister agree that the decision that was announced yesterday means that it will be difficult for British Telecom and Mercury to carry out the Government's proposals on competitiveness and investment? How will they be able to compete internationally, how will they be able to invest the £15 billion that they will want to invest and how will they lead Britain into the 21st century in that sector?

Mr. Taylor: BT, Mercury and the other public telephony operators are allowed into the household to supply video on demand, home shopping arid home banking. They are allowed to take all services into small business and all services of a fibre-optic nature into institutions of health and education. They are not restrained. I was delighted to welcome yesterday BT's statement that it will continue massive investment in those sectors.
The hon. Lady should understand that the success of the revolution in optic fibres has been achieved partly through competition, and that has been established by giving the cable companies a secure period in which to invest and to lay cables. We are now halfway through the cycle, and I have no intention of uprooting the investors before they have even had a chance of obtaining a proper return.

Exports

Mr. Nigel Evans: To ask the President of the Board of Trade what support he is giving to north-west industries wishing to export to former Soviet Union countries.

Mr. Jonathan Evans: North-west companies wishing to export to former Soviet Union countries are eligible for the full range of nationally available services provided by my Department and overseas posts. That national support includes the use of export promoters, subsidised attendance for businesses at trade fairs and on sponsored missions and the provision of a wide range of other intelligence gathering and promotional activities.

Mr. Nigel Evans: I thank my hon. Friend for that answer.
On a recent visit to Russia, I spoke with our ambassador and was delighted to see the efforts that staff are putting into assisting British companies to export to Russia. Will my hon. Friend congratulate a company in the north-west called Thwaites Brewery, which recently exported some of its excellent product to Russia, and will he say what proactive action the Government are taking


to ensure that more companies in the north-west and other regions know about the potential of countries such as Russia?

Mr. Jonathan Evans: I am happy to accept my hon. Friend's invitation. Being someone who is aware of the products of the Daniel Thwaites Brewery, I am sure that consumers in Russia will have the opportunity of taking advantage of the produce of that company on many occasions in future. I congratulate the brewery on its export success this year.
A number of north-western companies have been engaged in trade missions that have been supported by the DTI this year. I am aware of three north-west companies that are due to participate in another mission undertaken by the British Baltic chamber of commerce early next year. Five export promoters have been seconded from industry and are working with the DTI actively to support overseas trade, particularly within the former Soviet Union.

Mr. McAvoy: When considering what support he can offer companies in the north-west, what weight has the Minister given to the difficulties suffered by small and medium-sized businesses caused by the late payment of debt? In the light of that, why will not the Government introduce a statutory right to interest for late payment of debt?

Mr. Evans: The Department is keen to do all that it can to encourage businesses of all sizes. That is why it has been actively engaged in the activities that I have outlined. If the hon. Gentleman is unaware of the specific action undertaken by the Department, it is important to say that the various schemes run, not just by the DTI but by the Foreign Office and the Export Credits Guarantee Department, are explained in a helpful publication that my right hon. Friend the President of the Board of Trade has placed in the House of Commons Library. It is entitled "Overseas Trade Services—Central and Eastern Europe and the former Soviet Union" and I invite the hon. Gentleman to read it.

Ms Gillan: Will my hon. Friend accept my congratulations—to add to those from businesses in the north-west and throughout the country—on the DTI's excellent initiative in appointing export promoters? Does he agree that those export promoters have contributed in no small way to the golden, export-led recovery? Will he give our businesses a firm assurance that the posts of export promoters will remain firmly within the DTI?

Mr. Evans: I can certainly say that it is our intention that they will remain so. I am grateful to my hon. Friend for paying tribute to the work undertaken by export promoters. I am aware that Mr. Robin Forrest, who is responsible for the north-west area, has visited a number of companies in the region.

Holiday Safety

Mr. Etherington: To ask the President of the Board of Trade what further discussions his Department has had with representatives of the major package holiday operators about the need to maintain and inspect safety levels at foreign holiday destinations.

Mr. Ian Taylor: I have had no such discussions and none have been requested. All major tour operators in the

UK observe guidance drawn up by the International Federation of Tour Operators, and endorsed by the Association of British Travel Agents.

Mr. Etherington: The Minister must surely be aware of the growing concern about the lack of adequate safety standards in holiday resorts in Spain and Tenerife. This year alone there have been three deaths in Spain due to faulty heating appliances, which have led to carbon monoxide poisoning. Will he therefore ask the major tour operators why they continue to send people to places with inadequate standards? If he does not receive a satisfactory answer will he do something about it in the same way as Dick Spring did when one of his constituents in Ireland was killed in similar circumstances? Will the Minister ask the Foreign Secretary to display the same zeal as that displayed by Mr. Spring?

Mr. Taylor: The hon. Member should be aware that the tragic cases in Spain, which he mentioned, led to a joint Foreign Office and Irish Foreign Office initiative because two of the couples were, I think, of joint nationality. The hon. Gentleman should not try to distinguish between the Irish effort and the British effort. There are problems related to carbon monoxide poisoning and travel firms are well aware of them. As the campaign in the UK shows, the problem does not occur only during holidays—there are between 30 and 40 known deaths from the same problem in the United Kingdom each year and we are talking with travel agency groups about that. They are not irresponsible, but are doing their utmost to check reports of faulty installations, which often involve cheap methods.

Mrs. Lait: Is my hon. Friend aware of the Rytlewski case in my constituency, in which a young girl fell to her death from a low window in Spain? Are there any proposals for the compulsory insurance of all travel companies or compulsory registration with the Association of British Travel Agents? Are any discussions being held in the Council of Ministers to promote standard safety procedures throughout the Community?

Mr. Taylor: I am very sorry to hear of the tragic case of my hon. Friend's constituent. Travel companies take out policies and inspect all the hotels that they list in their brochures. They also have guidance covering fire safety, swimming pools and public hygiene-and buildings too, I think.
The European Union has made several attempts to draw up a common system of regulation, particularly for fire safety in hotels. I am not aware of the point that my hon. Friend has made. The difficulty is always that we must ensure that the regulations move up to the highest, not the lowest, common denominator. I shall have to look again at my hon. Friend's suggestion.

Shipbuilding Industry

Mr. Hutton: To ask the President of the Board of Trade if he will make a statement about state aid to the shipbuilding industry.

Mr. Heseltine: The European Community's seventh directive on shipbuilding regulates state aids to shipbuilding within the Community in 1994 and is likely to be extended to cover 1995. The Government support


the OECD shipbuilding agreement which provides for the elimination of shipbuilding subsidies, on a multilateral basis, from 1 January 1996.

Mr. Hutton: I thank the President for that answer. What will be the subsidy for 1995 under the shipbuilding intervention fund scheme? Has he given any consideration to extending the period applying to guaranteed loans under the home shipbuilding loan guarantee scheme?

Mr. Heseltine: I cannot give the hon. Gentleman the answer that he requests. We expect the European Commission to announce the rate of subsidy; for 1994 it is 9 per cent. The moment I have updated information I shall make it available to the House.

Mr. Gallie: Given the pleas of Opposition Members in respect of the referral of both bids for VSEL to the Monopolies and Mergers Commission, can my right hon. Friend advise me on how on earth the British Aerospace bid can be referred to the MMC, as it has no shipbuilding interests at present?

Mr. Heseltine: I know that my hon. Friend will understand if I do not get drawn on that matter.

Mr. Beggs: The president must be aware of just how difficult it is for any United Kingdom shipyard to win orders or successfully tender bits for new business against European yards. The obvious conclusion is that some hidden subsidy or support is given to shipyards in Europe—support that British yards, and Harland and Wolff in Northern Ireland, cannot obtain. That is damaging their chances of gaining new business—[Interruption.]

Madam Speaker: Order. Is everybody sitting comfortably? [Laughter.]

Mr. Beggs: Now that that cargo has docked, I shall proceed. I call upon the President of the Board of Trade

to endeavour to establish whether hidden subsidies are being given to European yards, and to secure a level playing field for our own industry to compete on.

Mr. Heseltine: I am sympathetic to the hon. Gentleman's point. If there is any evidence of the sort of hidden subsidies to which he refers, I shall take it extremely seriously and seek to have them withdrawn.
It is important, however, to realise that the situation is not as bleak as the hon. Gentleman suggests. Vosper Thornycroft's turnover is up 22 per cent., and more than 90 per cent. of its business is in exports—a commendable achievement.

Trade Balance

Mr. Grocott: To ask the President of the Board of Trade what is the most recent figure for the balance of trade in manufactured goods.

Mr. Needham: In the latest three months the trade deficit in manufactured goods was £1.5 billion, down from £2.2. billion in the previous three months.

Mr. Grocott: That was a poor answer to a question I did not ask. Can the Minister confirm that our £8 billion deficit in 1993 was the clearest possible illustration of how our industrial base, especially in the west midlands, has been vandalised by the Government? Does the Minister share my nostalgia for those heady days in the 1970s under Labour when the surplus in manufactured goods rose to £5.8 billion? Will he confirm that not in his wildest dreams would he expect either the jobs or the apprenticeships that existed under Labour ever to come back under this Government?

Mr. Needham: Let us just recall those heady days in the 1970s, shall we—the strikes, the appalling productivity and the trade union restrictive practices? The hon. Gentleman obviously does not recall that in 1979 it took 13 man hours to make a tonne of steel, whereas British steel now does it in four hours. Obviously he does not know, or did not bother to find out, that since 1981 the export volume of British manufactured goods has increased faster than those of France, Germany, Italy or Japan. Instead of knocking that the hon. Gentleman should look at the facts.

Points of Order

Mr. Gerald Kaufman: On a point of order, Madam Speaker. On 25 October, I put an oral supplementary question to the Prime Minister in which I asked him to provide me with a list of the salaries of the chief executives of the next steps agencies, together with those of the civil servants whom those chief executives have replaced or succeeded. The Prime Minister replied to me on 15 November, providing me with the material about the chief executives of the agencies, but informed me that for the salaries of the civil servants I should table questions to Ministers. The Prime Minister's letter stated:
This information will only be available from the Minister concerned.
As the Prime Minister suggested, I therefore tabled questions to all the Ministers with responsibility for the next steps agencies, including the Secretary of State for Defence. My question to the Secretary of State is listed on page 133 of the Votes and Proceedings for last Friday and it asks
if he will list the salary and other emoluments of the civil servant who did the work of or work comparable to that of the chief executive of each next steps agency established by his Department before the agency was established.
Yesterday afternoon, I received a letter from a person called G. H. Wilson, headmaster and chief executive of the Duke of York's royal military school. It stated:
The Secretary of State for Defence has asked me to reply to your parliamentary question.
By the second post this afternoon, since I gave notice of my intention to raise this point of order with you, Madam Speaker, I received a letter from the headmaster of Queen Victoria school, Dunblane, Perthshire, stating:
I have been asked to reply to your Question".
I ask you to rule on two matters, Madam Speaker. The first is that persons who are not Members of this House have no right or status to answer parliamentary questions, should not purport to do so, and should be directed not to do so.
Secondly, whatever the role of a chief executive of a next steps agency may be, it is not to account for the salaries of civil servants, who are directly employed by Ministers who are responsible to the House; that the only people who are properly equipped and have the duty to answer those questions are Ministers; and that it is therefore unacceptable for Ministers to hive off to these deplorable agencies not only the work that they have done, but responsibility which the agencies do not have and on which they have no right to answer questions by a Member of Parliament.

Madam Speaker: The right hon. Gentleman raises not only a point of order but matters of a debating nature which I cannot enter into. For all that, I am grateful to him for giving me notice, to some extent, of his point of order. I have made inquiries into the matter, and have been informed that the letter to which he refers was sent to him in error. The headmaster was asked to provide information so that the Ministry of Defence could put together a comprehensive reply to the right hon. Gentleman. Instead, the headmaster misunderstood the

request and wrote directly to the right hon. Gentleman. I understand that a full reply to his question will be given by the relevant Minister tomorrow.

Mr. Alan Duncan: On a point of order, Madam Speaker. May I seek your guidance on whether it is improper for an outside body to influence the appointment of an adviser to a Select Committee? It is clear from a letter I have here that Unison has attempted to force Labour members of the Select Committee on Health to appoint a Unison member as an adviser to that Committee. That is exactly the sort of behaviour by the Chairman of a Select Committee that was condemned in the House yesterday by the hon. Member for Halifax (Mrs. Mahon).

Madam Speaker: I have not seen the letter, and I am not aware of the matter. [Interruption.] There is no point in waving it at me; I have good eyesight, but I cannot read it from that distance. Perhaps the hon. Gentleman will let me have the letter, and I shall see what I can do about it.

Mrs. Alice Mahon: Further to that point of order, Madam Speaker. My question to you yesterday was whether it was normal practice for the Chair of a Select Committee to report on such a sensitive issue when she had a one-to-one meeting with the manager of a advertising agency, and when the Committee had previously conducted a report into tobacco advertising—a very sensitive issue. On the issue raised in Committee, I, along with other Members, suggested that a member of Unison could advise us on a particular inquiry. It was openly done, and agreed unanimously by Conservative Members on that Committee.

Madam Speaker: I think that two points arise from points of order yesterday. The first concerns whether a Chairman or Chairwoman of a Select Committee should report to the Committee any approaches that relate to the work of that Committee. As I told the House yesterday, there are no rules that are relevant to the issue, but let me give the House my own views and a little guidance, if I may. It would be a matter of common sense and courtesy for such approaches to be reported. I am not seeking for rules and regulations to be engraved in tablets of stone. We have to apply common sense to our dealings with each other in the Chamber and in Committee, and I leave it at that.
The second issue is the notification that should be given by hon. Members who intend to refer in the Chamber to other hon. Members. It is a clear convention, again based on courtesy, that notice should be given where such reference is intended to be made, but clearly there will be cases where the reference arises on the spur of the moment—during a point of order or at Question Time, when advance notification is unlikely to be practical. Of course, hon. Members should consider whether reference to a colleague without notice is fair. We all understand when it is on the spur of the moment, but we must consider whether it is fair to behave in that way.

Ms Angela Eagle: On a point of order, Madam Speaker. I seek your guidance on a serious matter. As you know, yesterday the Select Committee on Members' Interests met to consider the very sensitive and important matter of a complaint against the hon. Member for Tatton (Mr. Hamilton). As a member of that


Committee, I was astonished when I realised that a Government Whip was present as a member of the Select Committee. Of course, it would be wrong to me to reveal anything that went on in the Committee hearing, but I think that he made an influential—

Madam Speaker: Order. The hon. Lady should be very careful about what she is reporting to me. If she has something to report about a Committee, she should come and see me and not report it in this way. I would be glad to see her, but at the moment she is reporting something that took place in a Select Committee of which I have no knowledge.

Ms Eagle: With respect, I want to ask you whether there is any precedent for a Whip, who is a member of the Government and takes the Crown payroll, to be a member of a Select Committee. I have been approached since the meeting by journalists who know of this, and they are astonished. This has set a very serious precedent, which threatens to breach the independence of the Select Committee system.

Madam Speaker: Perhaps the hon. Lady has not considered the matter carefully enough. I do not know the individual the hon. Lady is talking about. That is why I would rather she came to discuss the matter with me. It could well be that the House appointed the individual.

Mr. D. N. Campbell-Savours: On a point of order, Madam Speaker. The issue raised by my hon. Friend the Member for Wallasey (Ms Eagle) is of immense constitutional importance. A Government Whip has been appointed to the Select Committee on Members' Interests at a time when a series of sensitive inquiries are under way.
There is a precedent of which you should be aware. The Leader of the House of Commons is a member of the Broadcasting and Privileges Committees, but he has a remit, in that he has to steer changes through the House. The Attorney-General gives legal advice to the Committee on Privileges. That is his remit. The Financial Secretary to the Treasury is a member of the Public Accounts Committee, although he has never attended it. I was a member of that Committee for 11 years, but the Financial Secretary did not attend.
What we have here is a precedent where a Minister, because that is.what.a.Treasury Whip is, is attending a Select Committee meeting—

Madam Speaker: Order.

Mr. Campbell-Savours: —with a view to fixing its findings—

Madam Speaker: Order. The hon. Gentleman must resume his.seat—[Interruption.] Order. I have heard sufficient to know that it is what I first suspected. This House has appointed the hon Member concerned. The hon. Member for Workington, (Mr. Campbell-Savours) and anyone else who wished to object to that should have done so at the time.

Mr. Denis MacShane: On a point of order, Madam Speaker. Yesterday, with the support of several hon. Members, I sought to table an early-day motion which contained reference to the famous Maples

memorandum and the word "yobbos". The Table Office has informed me today that you might object to an early-day motion containing the word "yobbos".
I would like your ruling on three points. First—

Madam Speaker: Order. Perhaps I can give the hon. Gentleman guidance now. There is a procedure by which, if early-day motions are refused by the Table Office, they come to me. I am therefore waiting for the early-day motion to come to me, and I will look at it in that light.

Mr. MacShane: indicated assent.

BILL PRESENTED

CHANNEL TUNNEL RAIL LINK

Mr. Secretary Mawhinney, supported by the Prime Minister, Mr. Secretary Hurd, Mr. Chancellor of the Exchequer, Mr. Secretary Heseltine, Mr. Secretary Gummer and Mr. John Watts, presented a Bill to provide for the construction, maintenance and operation of a railway between St. Pancras, in London, and the Channel Tunnel portal at Castle Hill, Folkestone, in Kent. together with associated works, and of works which can be carried out in conjunction therewith; to provide for the improvement of the A2 at Cobham, in Kent, and of the M2 between junctions 1 and 4, together with associated works; to make provision with respect to compensation in relation to the acquisition of blighted land; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow, and to be printed. [Bill 3.]

STATUTORY INSTRUMENTS, &C

Madam Speaker: With permission, I shall put together the motions relating to statutory instruments.
Motion made, and Question put forthwith pursuant to Standing Order No. 101(3) (Standing Committees on Statutory Instruments, &amp;c.).

INDUSTRIAL TRAINING LEVY

That the draft Industrial Training Levy (Engineering Construction Board) Order 1995 be referred to a Standing Committee on Statutory Instruments, &amp;c.
That the draft Industrial Training Levy (Construction Board) Order 1995 be referred to a Standing Committee on Statutory Instruments, &amp;c.—[Mr. Bunts.]
Question agreed to.

Orders of the Day — Debate on the Address

SIXTH DAY

Order read for resuming adjourned debate on Question,
That an humble Address be presented to Her Majesty as follows:—
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.—[Mr. Dunn.]
Question again proposed.

The Economy

Madam Speaker: I have selected the amendment in the name of the Leader of the Opposition. Also, in accordance with Standing Order No. 32, I shall call the amendment standing in the name of the leader of the Liberal Democrat party.

Mr. Gordon Brown: I beg to move, as an amendment to the Address, at the end of the Question to add:
But note that living standards for millions are falling and that election promises are being broken again with seven tax rises to pay for Government economic mismanagement; humbly regret that the Gracious Speech excludes positive measures to remove the fear of unemployment, to tackle the unacceptable and clumsy reforms of the NHS and to cease treating education as a business rather than a service; regret the absence of legislation to tackle executive share options and to deal with the excesses in the privatised utilities; regret the absence of a strategy for employment, skills and industry including measures to assist the Post Office expand in the public sector; and call for a reconsideration of the further cuts in vitally important public services and the abandonment of the increase in VAT on fuel for domestic and charitable purposes to 17.5 per cent.
The amendment identifies what is wrong with this country, and what should have been tackled through the Queen's Speech. What is wrong is that living standards are falling; fear of unemployment is widespread; the health and education reforms of this Government are unacceptable; the gap between rich and poor is too wide; the VAT rise on fuel is simply wrong; and the excessive executive pay packages, especially in the privatised utilities, are causing real offence throughout the country. Those are the terms of our amendment, and, by identify those problems, Conservative Members should find it possible to support it.
All those proposals are contained in the memorandum of advice from the vice-chairman of the Conservative party to the Government, which was published only a few days ago. That memorandum shows that even the Conservatives now admit what is wrong and that the Labour party is right. It shows that, when there is consensus throughout the country on what needs to be

done, the Government are seen as out of touch, ineffectual, unable to deliver on their promises, and having no conception of the public interest.

Mr. Phil Gallie: Will the hon. Gentleman give way?

Mr. Brown: I will give way to the hon. Gentleman, and then I shall make progress.

Mr. Gallie: Does the hon. Gentleman agree with the right hon. Member for Kingston upon Hull, East (Mr. Prescott), who says that there should be a £4.05 minimum rate per hour, and that that should become the policy of the Labour party?

Mr. Brown: The hon. Gentleman should know that my right hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has said no such thing. The hon. Gentleman should address what I read out from the Maples memorandum. In particular, the hon. Gentleman might take account of his own constituency party in Ayr, which has said that it is afraid for the welfare of the elderly if VAT is increased. Perhaps the hon. Gentleman will seek to join us when we try to have the VAT issue reopened.
What does the Maples memorandum say needs to be done? The first thing that it says is that we should stop the implementation of the second stage of the VAT increase. It says that changes must be made in the national health service, because the reforms are not working. It also says that the Government should end tax subsidies for executive pay—something which is Labour policy and which should have been done years ago by the Government.
Even some Conservatives now understand that what the Government are doing is not in the national interest, but purely in the interests of a few factions in the Conservative party. One reason why the Government are unable to do what is right for the country is that the Conservative party is so divided, from faction to faction. It is so divided on Europe that the best summary of its approach is isolationism tempered only by the occasional visit to the Ritz hotel in Paris.
As we see again today, the job of chairman of the 1922 Committee is now at risk. How do we defend the situation in which the real crime of the chairman of the 1922 Committee, in the view of Conservative Members, is that he is too loyal to the Prime Minister of this country? No doubt the next chairman of the 1922 Committee will have to pass a new test—a disloyalty test. The governing party is so paralysed by the tyranny of its factions and the impotence of its leadership that it is unfit to govern.

Dr. Robert Spink: The hon. Gentleman is giving much peripheral information at the moment, but he is avoiding policy. What is his anti-inflation policy? Is he prepared, as well as to lower interest rates, to raise them if that is necessary for the economic good management of this country?

Mr. Brown: The reason that interest rates have had to rise is that the capacity of the British economy is now too small. Whenever the economy expands, there are now inflationary pressures as a result of the mismanagement of policy.
As for policy, does the hon. Gentleman agree that I have asked him to support three specific policies already? They were, first, to abandon the VAT rise in respect of fuel; secondly, to deal with the health service and the reforms that have gone wrong; and, thirdly—I hope that he will agree on this—that tax subsidies should be withdrawn from the executive share options and the perks for the privatised utilities that nobody now can defend?

Mr. Tony Marlow: rose—

Mr. Gyles Brandreth: rose—

Mr. Brown: I shall make progress for a minute, and then I should be very happy to allow both sides of the Conservative equation to state their views.
There is nothing in the Gracious Speech to deal with the problems of industry and skills. There is nothing on employment, except penalising the unemployed. There is nothing to build social cohesion or modernise the welfare state. There is nothing to tackle the causes of crime. There is nothing to do what the Maples memorandum admits to undoing. He admits to treating education "as a business" and to market reforms in the health service to which doctors and nurses are, as he said, "universally hostile".
The whole interest of the Maples memorandum and of Conservative Members is not in changing policy to respond to the needs of the country, not to do what is right either for the unemployed or for the rest of the country, but simply to manipulate public opinion to win a further term of government. The Government's election strategy, as revealed in the memorandum, is not a shift in policy but a move to control the press, issue black propaganda and propagate dirty tricks. Every decision to be made by the Conservative party must relate not to what is good for the people of this country and for its long-term future, but to what will help the party in its current predicament.

Mr. Marlow: rose—

Mr. Brandreth: rose—

Mr. Brown: Let me make a little progress, and illustrate my point.
We learn from the memorandum that identity cards are now to be considered. There is to be a Green Paper; a decision was announced on 13 October. We knew yesterday that a Cabinet Committee has just been set up, but we now learn from the memorandum that the decision was made not because the Home Secretary thought it necessary, right or good for the country, but simply because the Government believe that it could embarrass Labour into opposing the introduction of the cards.
As for the economy, yet more anti-trade union legislation is being contemplated, not because it is in the public interest but simply because the Government think that it could divide the Labour party. Nothing is done in the public interest; action is taken only in the narrow interest of the Conservative party's desperate tactics to bring about its re-election.
We must ask how much of the Gracious Speech was written not with a sense of what is needed for the country, but simply with an eye to the fortunes of what is—as the Chancellor of the Exchequer has admitted—an increasingly panic-stricken Conservative party.
What about the presentation of economic policy, according to the memorandum? The Conservatives say that they need help from the few remaining Conservative supporters outside the Conservative party. The memorandum states:
Third-party endorsements are key, and infinitely more reliable than Ministers.
That is a fine comment on the integrity of colleagues.
Let me quote the full list of potential helpers—the range of people who could offer third-party endorsements of the Conservatives' economic and social policies: "the police"—well, perhaps 10 years ago, but not now; "the CBI"—well, they are not all that keen, as the Chancellor well knows. The memorandum also says:
We must avoid antagonising them if we can help it.
The memorandum then refers to the International Monetary Fund and the Organisation for Economic Co-operation and Development. Are we seriously to imagine that spokesmen from the IMF and the OECD could turn out and vote to save the Conservative party in the Dudley by-election? After those organisations, all that is left is the Institute of Directors. When their last remaining supporter is the Institute of Directors—and its support for the Conservatives is ebbing away—the Government have problems indeed.
What else does Mr. Maples say in the memorandum? We should remember that he was hand-picked for the job by the Prime Minister. He is chairman of Saatchi and Saatchi, and the Prime Minister wanted him to stand as parliamentary candidate for the Newbury seat. The proposals in the memorandum are very close to the Prime Minister's thinking. Dealing with the question of the Labour leader, Mr. Maples asks:
Could we set some Back Benchers on to this? Maybe a few yobbos of our own to try and knock them out a bit, and another team to operate more subtly on the changes of mind and differences of view.
There we have the Conservative party in the House: the yobbos on one hand, and those acting more subtly—the intellectuals—on the other. That is the new Tory parliamentary hierarchy: the Prime Minister, Ministers, junior Ministers, Whips, parliamentary private secretaries, yobbos and, finally, the intellectuals. If someone cannot make it into the House, of course, he can always become vice-chairman of the Conservative party. If a company wants a question to be raised in the House, does it go to the yobbos or the intellectuals—or must the two groups compete on price?
So there we have it: the modern Conservative party, no longer divided only between wets and dries, Euro-enthusiasts and Euro-sceptics, but now divided overall—yobbos versus intellectuals.

Mr. Marlow: Will the hon. Gentleman give way?

Mr. Brown: Is the hon. Gentleman a yobbo or an intellectual? Could the country ever tell the difference?

Mr. Marlow: At least I am not a soundbite.
The hon. Gentleman waxed poetic on the subject of factions. We are, of course, the party of power, and it is therefore quite proper for debates to take place within the party of power. Are there no debates in the hon. Gentleman's party? Are there no factions? Can he tell the


House how his party will vote on Monday in regard to giving more money to Brussels? Will every member of his party do the same?

Mr. Brown: Compared with the Conservative party, the Labour party's debates reach conclusions. There are not interminable divisions that cannot be resolved in the Labour party. Before the hon. Gentleman casts his vote in the great election for the 1922 Committee, I should also tell him that on Monday, as he would expect, the Labour party will be proposing a reasoned amendment to the Bill, and I hope that he and others will join us in the Lobbies. One thing is clear: that is that the country has no confidence in the Government's approach to the European issue.
What does all that mean for economic policy? Despite all the boasts about what is happening to the economy—we shall hear them again from the Chancellor this afternoon—despite all that he will say about this figure and that figure, figures that he will pluck out of the air from here and there, the central fact stands out in the Maples memorandum—real take-home pay, he says, is falling this year, he says that it will fall next year, and he adds:
We will have to see this rise in real take-home pay soon or we will have had four or even five years of recovery with no rise in living standards.
He is aware of the impact of the tax rises on ordinary people. He is aware now of the impact of the interest rate rises on people's mortgages. No matter how much bluster there is from the Chancellor this afternoon, he must face up to the fact that millions of British people are seeing their living standards fall.
But what else does the Maples memorandum tell us about economic policy? It says:
It is no use"—
this is important for the Conservatives' election strategy—
to pursue fiscal and monetary rectitude if there is no rise in living standards and job opportunities until too late.
What Mr. Maples means by "too late" is after the general election. In other words, he is prepared to admit in private, as the Chancellor seems to be admitting as well, that he will sacrifice all claim to rectitude to achieve a pre-election boom, even when it is not in the long-term interests of the economy.
I challenge the Chancellor to condemn the Maples memorandum, which suggests that a pre-election boom will be manipulated by the Conservative party; because all talk of firmness, of sustainable growth, of commitment to low inflation, irrespective of politics, is hypocrisy if the Government are prepared to manipulate the economy in the way that is being suggested by Mr. Maples.

Mr. Brandreth: rose—

Mr. Gary Streeter: rose—

Mr. Brown: Is it a yobbo or an intellectual? I will take the yobbo.

Mr. Streeter: Speaking as an intellectual, may I ask the hon. Gentleman how he feels about his prediction in March 1993, when he said that unemployment would rise

month after month after month when in fact unemployment has fallen since that date month after month after month?

Mr. Brown: As the hon. Gentleman is well aware, what I said was said the day after the Budget, reading from the Budget statement, after it had been said that it would be some time before unemployment started to fall again. That is what the Chancellor of the day said. That is what the Budget statement said. If the hon. Gentleman wants to condemn me, he had better condemn the Treasury and those on the Conservative Front Bench.
The hon. Gentleman also has a question to answer. Why did he say to his electorate in Plymouth, Sutton at the last election, "We will get taxes down even further"? Should he not be apologising to the British people?

Mr. Oliver Heald: rose—

Mr. Brown: I shall give way once more, and then I will have to make some progress.

Mr. Heald: The Labour party is committed to the European recovery fund at a cost of £77 billion. Will the hon. Gentleman give us a bit of rectitude now and tell us whether he confirms that the Labour party will go ahead with that programme and what it will cost the British taxpayer? Yes or no—a clear answer, please.

Mr. Brown: That was not the question of an intellectual. The hon. Gentleman is presumably not talking about the European recovery fund but what is called the European investment fund. One of our complaints is that the European investment fund has not been set up expeditiously enough to deal with this recession, and presumably can only be in being, because of all the delays, to deal with a future recession. As the hon. Gentleman knows, what is costing this country billions of pounds is not acting against unemployment; what is costing £25 billion is the failure to take action to remove our present unemployment. When people realise that every ordinary family pays £20 a week to deal with the Government's failure to combat unemployment, they will join us in calling for action.

Mr. Nick Hawkins: In the light of what he has just said, will the hon. Gentleman explain why every Labour Government have left office with unemployment higher than when they came into office?

Mr. Brown: Unemployment was falling when Labour left office. Under the Conservative Government, in every year since 1980 unemployment has been 1 million higher than it was under Labour. The Government have been prepared to live with unemployment at more than 2 million—it is now 2.5 million—as an instrument of economic policy.
Let me tell the hon. Member for Blackpool, South (Mr. Hawkins) what could be done about unemployment, and what the Chancellor could do next Tuesday if he were prepared to take the action. First, he could release local authority capital receipts and let local authorities build. Secondly, as we have proposed, he could invest in a small business expansion scheme, as existed previously under the present Government and under a Labour Government. That would allow the economy to expand.
Thirdly, the Chancellor could create an environmental task force for the young people in our community so as to engage their energies in dealing with the problems of


the environment. Fourthly, there could be a tax rebate for employers prepared to take on the long-term unemployed. If Conservative Members ask me whether all that would cost money, I tell them that yes, in the first year it would. But it would enable us to deal with the problem and then reduce public spending on unemployment.
Let me tell Conservative Members how that could be paid for. We have already made our proposals. First, there could be a windfall tax on the excess profits of the privatised utilities.

Mr. James Clappison: Would the hon. Gentleman be prepared to live with the consequences of such a windfall tax? Imposed on industries that are already regulated, it would inevitably reduce their cost competitiveness, capacity for innovation and, more than anything else, their ability to invest. Is he prepared to live with a return to the sort of customer service that we had from those industries when the Labour party was in power?

Mr. Brown: The hon. Gentleman should be clear with the House; he is defending the profit levels of the utilities, profits of £45 billion during the—

Several hon. Members: rose—

Madam Speaker: Order.

Mr. David Shaw: Will the hon. Gentleman give way on that point?

Mr. Brown: The hon. Gentleman is trying to make a claim to be an intellectual, and we should give him a chance. I shall give way to him first and then answer his hon. Friend's question.

Mr. Shaw: Does the hon. Gentleman accept the figures that I have from the Library, which show that the sum of £45 billion that he has mentioned represents the total pre-tax profit for all the privatised utilities since they were privatised, and that part of pre-tax profit is paid to the Government in corporation tax and to pension funds in dividends? How many pension funds does he think should be denied dividends? Does he also accept that pre-tax profits are used to fund investment that will help this country?

Mr. Brown: The hon. Gentleman is factually wrong, and I hope that he will withdraw his comments.

Mr. Shaw: I got the figures from the Library.

Mr. Brown: The question is not whether the hon. Gentleman got the figures from the Library but whether he can understand them. The £45 billion represents profits earned between 1989, the year before the recession started, and now. If the hon. Gentleman wants to correct me on that, I shall happily give way to him again.
The utilities' profits have risen by 50 per cent. during a recession. I can think of no other company in the country that could justify a 50 per cent. increase in profits during a recession in which others are having to cut back. I believe that the Energy Users Council, whose secretary is a former Conservative Member of Parliament, has now put the case for a windfall tax on the privatised utilities.
Government Members will come to recognise that, as the water companies have been afforded tax allowances of £7.5 billion, the British Rail privatisation contains extra tax allowances of £1.5 billion, and the National Grid is

about to be demerged from the electricity companies—giving a windfall profit, over and above those about which we are talking, of nearly £4 billion—the case for action on behalf of the consumers of this country is now overwhelming.
The Government are not prepared to act in relation to the privatised utilities or to take the advice of the vice-chairman of the Conservative party in relation to competitive share options, because too many people in the Conservative party benefit from those profits and from those share options.
Let us remember that, on the board of British Gas—we have been talking about the company this week—is the person who privatised British Gas, Lord Walker; on the board of BT is the person who privatised BT, Lord Tebbit; on the board of National Freight is the person who privatised it, the former chairman of the Conservative party, the right hon. Member Sutton Coldfield (Sir N. Fowler); and on the board of Cable and Wireless is the person who used to regulate Cable and Wireless, Lord Young.
I believe that people in this country are increasingly disgusted by the fact that the people who are defending excessive salary rises are also the people who want to deny a decent income to pensioners during these winter months. It is time we had a Government which will do something about that.
When there is a consensus in the country about what needs to be done in relation to unemployment, there is also a consensus about what needs to be done in relation to industry—to end short-termism in relation to dividends, to introduce commercial finance into the Post Office, to further public-private partnership with the task force which we have proposed, and to create a university of industry for skills education.
Why does the Queen's Speech not contain one measure to deal with the problems on which consensus now stretches from the trade union movement through to most people in the business community? It does not, because the Cabinet and the Government—our entire political leadership—are paralysed by bitter entrenched factionalism. That is why they cannot act on Europe in a way which is sensible for party policy. The Maples memorandum makes it clear that the key issue is not what is good for Britain, but party unity. The memorandum states that the Conservative party must remain more Euro-sceptic than Labour.
They cannot act on the Post Office because of the bitter entrenched factionalism in the Conservative party. The left vetoes privatisation, and the right vetoes public-private partnership, so nothing is done. The memorandum from the Lord Privy Seal made it clear that the reason private finance for a publicly owned Post Office was rejected was not because it was against the interests of the country or taxpayers, but because it would seriously undermine the Government's whole approach to privatisation. Factionalism is again rampant. Private funds were rejected for the Post Office not because they were unhelpful, but because they would have revealed the limitations of privatisation as a dogma.
What of industry policy as a whole? We know that dividends have been too high for the levels of investment which we need in the economy. We know also that a new industry policy was favoured by the President of the Board of Trade before he came to the Department of


Trade and Industry, when he advocated an English development agency, research and development incentives, tough monopoly and merger legislation, and a training level for skills. But why is Britain denied an industry policy such as other countries have? Again, bitter entrenched factionalism in the Conservative party has dictated that there should be no industry policy.
The industry budget, as we know, was the subject of an acrimonious dispute between right and left, and between the President and the Secretary of State for Employment, this summer. The President wanted to continue the regional incentive, and the Chief Secretary—as he was then—wanted to get rid of it.
Bitter entrenched factionalism has also paralysed policy on investment and the City. We know now that there will be no full publication of the review on dividends for the City. It will not be published because of what we know now was opposition, not from the right or left of the Conservative party, but from outside this House, from a sponsor of the Conservative party, Lord Hanson. He told the Prime Minister that the proposals were socialist, the Prime Minister dropped them, and the review will now not be published.
The right wing vetoes a competitiveness review from the President of the Board of Trade, Lord Hanson vetoes a dividend review, and nothing is done to deal with the problems we face in relation to industry.
It is factionalism which explains why there is no agreement in the Conservative party and why there is a yawning gap growing between what needs to be done in the interests of the public and what the public are getting from the Government. It explains what is happening about Europe, industry and the economy. That is why, as the Maples memorandum showed, the people find that they have a Government whom they cannot trust and do not believe to be telling the truth.
Nowhere is the betrayal of the Government greater than on taxation. It is not an accident that we are soon to face a Budget just when the Conservative party is trying to tell us that tax cuts are on the way at some point, but when everyone knows that we face seven tax rises over the next few years.
Let us be absolutely clear about VAT. The same Chancellor who has been asked by some Conservative colleagues to abandon the rise in VAT to 17.5 per cent. is the person who wrote a letter to one of his constituents saying:
I have always thought we exempt too many goods and services from VAT in this country.
Let us also be clear that he is the same Chancellor who said:
With hindsight it would have been politically advantageous to go to 17.5 per cent. straight away and bring it in this April.
Far from wanting to leave it at 8 per cent. next year, the Chancellor wanted VAT at 17.5 per cent. this year.
If anything shows how out of touch and insensitive the Chancellor and his colleagues at the Treasury are, it is that they are prepared to impose VAT on fuel at 17.5 per cent. At the same time, the Chancellor has made clear his

commitment to impose VAT on food, transport, including rail fares, and on children's clothes, if he could get away with it, because that is the principle in which he believes.

Mr. Iain Duncan Smith: Given that the hon. Gentleman now believes that taxation is too high, does he therefore believe that public expenditure is too high or too low?

Mr. Brown: We are wasting huge amounts of public money on paying the bills of unemployment.

Mr. Duncan Smith: Answer the question.

Mr. Brown: I will tell the hon. Gentleman how he could reduce public expenditure—by tackling the long-term problems of unemployment that the Conservative party has failed to do. He could cut out waste in the public sector by taking up some of our proposals concerning tax reliefs on executive share options and private medical insurance.
Today, the Dudley—

Mr. Duncan Smith: How about an answer?

Madam Speaker: Order. The hon. Gentleman has had his intervention. I will not tolerate remarks from a sedentary position.

Mr. Duncan Smith: On a point of order, Madam Speaker. I asked a clear question in my intervention. You said, quite rightly, that I had had my opportunity. I asked whether public expenditure was too high or too low, but the hon. Member for Dunfermline, East (Mr. Brown) failed to answer my question.

Madam Speaker: That is not a point of order for me. The hon. Gentleman had an opportunity to put his question, and the hon. Member for Dunfermline, East (Mr. Brown) responded in the way he wanted. That is not a matter for me. I will not have barracking. I am sick and tired of barracking from both sides of the Chamber.

Mr. Brown: The hon. Member for Chingford (Mr. Duncan Smith) interrupted me during my discussion of VAT, but he might have reminded the House that, despite all his right-wing views, his own constituency association put a motion before the Conservative conference urging the Government to abandon VAT on fuel as a matter of urgency.
Today the Dudley by-election has been called. The promises on VAT have been broken; the promises made on national insurance have been broken; the promises on income taxation and on allowances have been broken. A new tax has been introduced on home insurance, and taxation on mortgages will rise despite the Government's promise at the election to "maintain mortgage tax relief." Ministers even promised:
We will raise the tax threshold for inheritance tax",
but then failed to do that. They are a Government who not only break their promises to the living, but are even prepared to break their promises to the dead.
Taxes will rise because of bills of more than £25 billion a year to pay for unemployment. Those tax increases are a direct and inescapable consequence of economic mismanagement. What does the Chancellor say now? Does he admit that the Government misled people and betrayed their promises? Does he apologise or confess his


mistakes? In words that will haunt the Chancellor throughout the Dudley by-election, he told us that promises did not really matter. He said:
I am less impressed by out-of-context quotations from stray remarks in speeches in Dudley on a wet Wednesday night during a general election campaign".
His defence is, "Read my lips, but not in Dudley on a wet night".
May I remind the Chancellor what was said in Dudley during the general election campaign? The manifesto of the Tory candidate for Dudley, East said:
We will get taxes down"—
[Interruption.] The Chancellor seems to think that the Dudley by-election was last year. It is about to happen, and the Chancellor had better face up to the fact that what he said last year will be repeated this year, because it has significance for the Dudley by-election and what people there think about the country.
The manifesto of the Tory candidate for Dudley, East said:
We will get taxes down further, building on the new 20 per cent. rate … Tax is the dirtiest word in the Conservative philosophy, unlike the socialists who are going down the disastrous pathway of higher taxation and national insurance contributions, taking money out of your earnings".
Which party has put up taxation and national insurance contributions? The Conservative party did so, in the biggest tax rise in history. Although promises were made throughout that election campaign in Dudley, the Chancellor says that we need not pay them too much attention, because there are promises, electoral promises and promises made in Dudley.
We know what the Chancellor thinks of the people of Dudley. We shall soon hear what the people of Dudley think of the Chancellor. Let any Minister go to Dudley and outline his plans for the next few years. I assure him that no-one will believe a word he says.

Mr. Hawkins: Will the hon. Gentleman give way?

Mr. Brown: I shall not give way again. I had to educate the hon. Member for Chingford (Mr. Duncan Smith) to make him something that he is not—an intellectual—after the last intervention, and I do not propose to do it again.
As the Chancellor admits, there is no feel-good factor in Britain today. There is a feel-angry facto, and a feel-betrayed factor caused by broken promises, which the Gracious Address does nothing to answer.
I have a final warning for the Chancellor before his Budget. A fundamental review into social security expenditure is currently taking place. The Chancellor's policies and those of his Government have already undermined sickness pay, maternity pay, invalidity benefit and unemployment benefit. He now seems to be out for industrial injuries benefit, and even help for the disabled and the unemployed. If the Budget does nothing about abuses at the top, continues to impose VAT on fuel and yet cuts into vital services for the sick and disabled, the country—not just people in Dudley—will never forgive the Chancellor.
Allegations of sleaze are but one manifestation of a breakdown in this Government. They are symptoms of a deeper malaise—a breakdown in ethics at the heart of government: the £1,000 questions; the visit to the Ritz; top salary rises that go uncondemned; public funds, according to the Maples memorandum, to be used for

party advantage; public servants to be fingered; the media to be suborned; the news to be controlled; and opponents to be shouted down or, if they are public servants in the health service, to be menaced. The Conservative party's desperate scramble for survival is the only thing that unites it.
The Government have long since abandoned the interests of country as a whole, and have retreated into the interests of the party. They have now abandoned even that, and are continually retreating into factionalism and greater division. They can no longer speak for Britain. They must go, and they must go soon.

The Chancellor of the Exchequer (Mr. Kenneth Clarke): Before you, Mr. Deputy Speaker, took the Chair, Madam Speaker made a ruling on a point of order in which she asked the House to have regard to common sense in its proceedings. It was a bold attempt to overturn the tradition of centuries in our proceedings. If we were to follow common sense, it might be an idea not to hold a debate on the economy about a week before a Budget. However, those are the only debates that we ever have on the economy nowadays, because of the choice of the Labour party. Debates on the economy are few and far between. After this week, we shall not see much of the hon. Member for Dunfermline, East (Mr. Brown) before this time next year, when he will come back, as he came back a moment ago, with some of the same passages from the speech that he gave at this stage last year.
I remember times past, when the International Monetary Fund ran this country, when Mr. Healey kept having to change his mind, and when we had frequent Budgets and frequent debates. Those days are behind us, but they are behind us because the economic news is steadily getting better, so the Opposition no longer want to debate the economy. They choose a week before the Budget because they believe—

Mr. Gordon Brown: rose—

Mr. Clarke: I shall give way in a moment.
The Opposition choose a week before the Budget because they know that Budget secrecy restrains Conservative Members, and they speak on the Budget because they have to speak on the Budget. When we ask any questions in between, all is silence.
The hon. Member for Dunfermline, East used a great deal of his material from what he called "the Maples memorandum"—a survey that was targeted at a section of the population that is not voting for the Conservative party. Bill Clinton's team probably used many similar surveys. The hon. Member for Hartlepool (Mr. Mandelson) probably has many such surveys. The difference between the Conservative party and the Labour party—which used to believe in socialism, and used to have an economic policy—is that Labour uses such surveys to try to find out what its ideas should be. However, when, in reply to an intervention, the hon. Member for Dunfermline, East told one of my hon. Friends that when the Labour party has debates, it comes



to conclusions, we realised all over again that conclusions on economic policy there are none, and there will not be, from the Labour party.

Mr. Nigel Griffiths: rose—

Ms Angela Eagle: rose—

Mr. Clarke: I shall give way in a second, if either of the hon. Members persists.
The hon. Member for Dunfermline, East will produce a shadow Budget. Today he has the Floor of the House of Commons, and he could have produced that shadow Budget. He is not doing so. He will produce it tomorrow; and he will produce it tomorrow because he knows that its hollowness, its emptiness and its list of meaningless slogans would not bear scrutiny in the House.
Earlier, the speech of the hon. Member for Dunfermline, East rattled on for a time about some public expenditure by local authorities on capital projects and new environmental schemes for young people. When insistently questioned about how he would pay for it, he made evasive and all-too-familiar noises from the past about, "You would not have to pay for it because we would get unemployment down," without saying how he would ever get unemployment down.
The hon. Member for Dunfermline, East did not mention the loopholes that he mentioned last year. Last year, the loopholes were revealed to be taxes on legitimate business that would have damaged business, as Howard Davies said. This year, he has come up with the so-called "windfall tax", which will, apparently, produce millions of pounds for a Labour shadow Budget.
The purpose of the windfall tax is to revisit successful businesses—which have modernised themselves, invested heavily and reduced costs to their consumers in the case of electricity and gas—to obtain a second price for privatisation, at the expense of shareholders, at the expense of investment, and at the expense of the prices that those industries would charge consumers.
The hon. Member for Dunfermline, East has no understanding of a market economy. He dare no longer say that he would renationalise those industries; he produces a windfall tax to return to them for a second tranche of money to finance the Labour party's spending programmes, at the expense of the consumer and of the people who invested in the companies.

Mr. Brown: Now that the Chancellor has ruled out action in relation to excess profits of the privatised utilities—and presumably he is ruling out action in relation to the demerger of the National Grid, where a £3 billion windfall will be made by the electricity companies—will he also tell us whether he unequivocally condemns the 75 per cent. pay rise for the chairman of British Gas?

Mr. Clarke: The National Grid was taken into account when we sold the company. The hon. Gentleman suggests returning for a second tranche on top of the price that the market has already paid for it. The improved efficiency, including the possible next steps for the National Grid, has already produced reductions in prices for consumers. The hon. Gentleman is going back to deceive the country into believing that taxing those companies will somehow

do no damage to the falling prices, the improved efficiency and the greater effectiveness of our electricity industry.

Ms Eagle: I thank the Chancellor of the Exchequer for his courtesy in giving way. Will he admit that the precedent for a windfall tax on any type of industry comes from a Tory Government, who introduced a windfall profit tax on banks in 1981?

Mr. Clarke: In 1981 there was a windfall tax because the banks were making profits, not as a result of their actions, but because of the monetary policies of the then Government, which were producing a windfall for the banks. The monetary policies of the then Government produced a hugely successful decade—the 1980s. The Labour party is proposing new and unexpected taxes on successful private companies that are improving the efficiency of our public services. When the Labour party sees success in the private sector, it instantly thinks of taxation. The hon. Lady's example was not a precedent.

Mr. Denis MacShane: rose—

Mr. Malcolm Bruce: rose—

Mr. Rhodri Morgan: rose—

Mr. Gordon Brown: rose—

Mr. Clarke: As I see only one intellectual rising, I shall give way to the hon. Gentleman.

Mr. Brown: If the Chancellor condemns new and unexpected taxes, perhaps he should condemn the tax rises for which the Government have been responsible. Will he now answer the question: does he condemn unequivocally the 75 per cent. pay rise for the chairman of British Gas?

Mr. Clarke: If the hon. Gentleman wants to talk about taxation policy, he should get rid of the rubbish about loopholes and windfall taxes, and answer the simple question about what he would do about taxation to finance the spending commitments that we hear from him every time that he makes a speech. On the salary increase of the chairman of British Gas, I disapprove of large salary increases for executives, in any company, which go far beyond those deemed reasonable for their performance.
The performance of the chief executive of British Gas has been extremely successful, which is why there has not been one gas price increase since 1991. Nevertheless, as my right hon. Friend the Prime Minister said yesterday, we should look at what can be done to increase shareholders' ability to take responsibility for the pay and rewards of their company's chief executives. The hon. Member for Dunfermline, East is thunderstruck—I have just suggested where we might look for policy. All he does is to protest. Presumably, he has in mind higher rates of taxation on high earners at every level.

Mr. Brown: The Prime Minister did not say yesterday that he was proposing increased powers for shareholders to deal with that matter—that is a new suggestion today from the Chancellor. Will the Chancellor take up our suggestion to give the regulator the power to intervene


when excessive pay rises cannot be justified? If companies can afford excessive pay rises, they can afford to cut prices.

Mr. Clarke: Every time that he speaks, the hon. Gentleman reveals that he has no understanding of a market economy—even though he purports to be a member of a party that has suddenly undergone a St. Paul-like conversion to market economics in the past two years. The regulator is there to protect the consumer and control prices. The price record of those public utilities is extremely good. The idea that a regulator should regulate the salaries of the management of a private company is a throwback to the old Labour party—as is the proposal to introduce a windfall tax if a company is profitable. If that is Labour's policy—if we at least have an inkling of it—we see that it is not a new policy, but a throwback to the past errors that brought Labour into such terrible difficulties.

Mr. Brown: Does the Chancellor agree that the proposal to give the regulator power to cut prices when there were excessive salary awards came initially from Sir Bryan Carsberg—who was appointed by the Government to be the regulator in the first instance and who has now been appointed to head the Office of Fair Trading? Will the Chancellor answer my question? Will he unequivocally condemn the 75 per cent. pay rise awarded to the chairman of British Gas?

Mr. Clarke: The regulator is responsible for looking at the management, costs and efficiency of the industry and the profitability of its operations. He then has to set what he believes to be price regulations that protect the interests of the consumer. The regulator is not there—no agency should be set up—to start determining, at the behest of the hon. Gentleman, the salaries to be paid at each level of a company. When the Labour party was last in power, it nationalised many companies and was responsible for great trading companies such as British Leyland. It was precisely the sort of interventionism that the hon. Gentleman espouses, whatever fancy new academic theories he tries—unsuccessfully—to find to support it. He is returning to the old interventionism that ruined this country as a manufacturing economy when the Labour party was last in power.

Several hon. Members: rose—

Mr. Clarke: I will give way more later, but I hope that hon. Members will allow me to continue for a while. The persistence of the hon. Member for Dunfermline, East has held me up somewhat.
The reason why the hon. Gentleman dismisses the background to his shadow Budget and my Budget next week is that good economic news is extremely bad news for him—it was scarcely touched on in his speech. We can usually see that in his face. Like his leader, who has now departed, the hon. Gentleman often smiles, but he cannot be accused of smiling all the time. When unemployment falls, as it is falling, he positively scowls. When inflation goes down, he glowers. Output and productivity increases always bring a large number of frowns to his face. The hon. Gentleman reminds me of Eeyore in "Winnie the Pooh". When there is good economic news, we can rely on the hon. Gentleman for
a loud roaring noise of Sadness and Despair".

Let me remind the hon. Gentleman of the peroration to the speech that he made on the Budget last year—not this half-quoted stuff about Dudley that he came out with again today. On 1 December 1993, he said:
As a result of this Budget, we are worse off today without. the slightest prospect of being a great deal better off as a nation tomorrow … It fails even to appreciate that the problems of trade deficits, unemployment and inflation will return again and again as long as the Government do not tackle these basic and fundamental issues … We wanted a Budget for employment, and the Government cut the employment budget. We wanted a Budget for industry, and the Government cut the industry budget. We wanted a Budget for investment, and the Government cut public investment in our economy. We wanted a Budget for fairness, and the Government ended up penalising 95 per cent. of the population. This Budget does nothing for fairness, jobs, industry and investment in the way that the country needs"—[Official Report, 1 December 1993; Vol. 233, c. 1071.]

Mr. D. N. Campbell-Savours: May I take the right hon. and learned Gentleman back to his reference to the role of shareholders? Has he ever been to an annual general meeting to try to overturn a decision of a board of directors? Has he noticed that institutional shareholders—in the case of British Gas, probably large pension funds and other major institutions—can prove very difficult to persuade, the more so if one is an individual shareholder? In the light of the Prime Minister's comments yesterday, and of his today, is the Chancellor prepared to write to the institutional shareholders of British Gas and ask them whether they are able or prepared to exert pressure on the board of British Gas in the matter of the chairman's salary?

Mr. Clarke: Such shareholders are increasingly taking action of that kind in some companies. I should not be surprised to find that they are usually more persuasive than the hon. Gentleman would be if he turned up at a public meeting. The hon. Gentleman seems in any case more convinced than his hon. Friend the Member for Dunfermline, East that this is an area we should explore.
To return to the hon. Gentleman's speech on last year's Budget: he attacked cuts in public spending and was against controlling public spending. He attacked tax increases, and he forecast continued downward movement for jobs, industry and investment, and a deterioration in the trade deficit. He said that inflation would come back. He of course knows what has happened since then. He knows what my right hon. Friend the President of the Board of Trade would say about that speech last year. I do not know whether Mr. Balls was responsible for drafting that peroration—but let us look at what has happened since the hon. Gentleman's attack.
Already we are the fastest growing of the major economies in Europe. Production is rising, unemployment falling. Exports are at record levels. Inflation is at a 27-year low. All in all, the country faces the most encouraging set of economic prospects for many years. It is a lasting recovery that will raise the living standards and improve the job security of men and women throughout the country, and lasting recovery is what I am going to deliver—and what the policies propounded by the hon. Gentleman could never deliver in a thousand years.

Mr. Bill Etherington: As the right hon. and learned Gentleman is painting such a rosy picture


of the economy, and if it is as buoyant as he says it is, why are those least able to deal with it about to have more VAT on fuel imposed on them?

Mr. Clarke: The people who are least likely to pay VAT are those who have had help with VAT. For a great proportion of those people, the help has exceeded the change in price because of price reductions over the past 12 months.
I am speaking about the recovery, which gives real hope for the future for prosperity and jobs. Each and every necessary policy measure that the Government have put in place to achieve that hope of lasting recovery—whether it is freeing up the labour market, making British business more competitive, better control and targeting of public spending, raising necessary revenue or lowering public borrowing—has been consistently opposed by the opposition parties. Those measures are the cause of the present recovery. I do not think that the public realise just how obstructive in practice the Labour party has been to all our efforts to get the recovery under way and create the present promising circumstances.

Mr. MacShane: The fact that the Chancellor is wearing hush puppies does not make him an intellectual. On the issue of good news, why is inflation 50 per cent. higher here than it is in France, why are unit labour costs lower in Germany, and why did the Engineering Employers Federation say last week that 22,000 manufacturing jobs will go next year to add to the 400,000 that have been lost since 1990? Capital investment will go down by 1 per cent. next year. That is all good news for the City and the gentlemen at the Ritz, but it is bad news for industry and manufacturing.

Mr. Clarke: I do not know about the hon. Gentleman's judgment on footwear, but his international comparisons are bizarre. Unemployment in France is 12.5 per cent., inflation in Germany is higher than it is here, and unemployment here has fallen by more than 400,000. This is the only country in western Europe where unemployment is falling at all. The hon. Gentleman thinks that his selective quotations can obscure the fact that we have put in place the fastest recovery in western Europe and that we have the best prospects of any economy in western Europe. The hon. Gentleman is deceiving himself, and he also deceives himself if he thinks that that performance would be any better under a Labour Government.
I shall now deal with what a Labour Government would do and refer to the key aspects of economic policy upon which the hon. Member for Dunfermline, East is always in practice quite silent. The first issue is low inflation. The Opposition have argued at every stage over the period during which I have been Chancellor that interest rates should be lower. We have falling unemployment. The Opposition are committed to a social chapter and a minimum wage, and they would destroy jobs. We have falling Government borrowing. Labour's spending pledges run into billions. There were a few billions in the speech by the hon. Member for Dunfermline, East today. We have record exports and rising investment, but the interventionism to which the hon. Gentleman is still totally committed would destroy the competitiveness of British business.
Since the hon. Member for Dunfermline, East last gave us his litany, we have ignored all the twaddle and obstruction from the Opposition. As a result and as the hon. Gentleman knows, in preparing for my Budget next week I do not think that I could have imagined a better economic background than that which we have achieved over the past 12 months. The combination of low inflation and sustainable growth has eluded us for years, but the signs are that it is within our grasp, and I am determined not to let it slip away.

Mr. Michael Connarty: I would not like the Chancellor to pass on without looking at some of the real problems facing the economy. The Engineering Employers Federation has shown that investment in manufacturing is down by 24 per cent. in volume since 1990, and that fixed investment in engineering has fallen every quarter since the end of 1989. We are being dragged along in the tailwind of the European recovery in the trade cycle upswing, but there is no fundamental improvement in our ability to compete with the economies of Europe.

Mr. Clarke: Selective years are being chosen, like selective features of foreign countries. Manufacturing investment is going up and the outlook for it is extremely good. The years chosen by the hon. Gentleman left out the investment boom in the late 1980s. None of that can obscure the fact that in the business world, in manufacturing, which is so vital to this country, prospects are now more attractive than they have been for a long time.

Mr. Malcolm Bruce: Will not the Chancellor admit what his own colleagues have pointed out—that investment this year was lower than it was five years ago and that in the first half of this year, as a percentage of GDP, it was the lowest ever recorded? That does not give the impression that there was a confident boom in investment, which was laying the foundations for sustained recovery.

Mr. Clarke: Choosing particular years is easy.

Mr. Bruce: This year.

Mr. Clarke: This year the prospects are improving and are good for investment. Now, as we are talking, investment is rising. We have a healthy recovery led by exports, investment rapidly improving and modest levels of consumer demand.
The hon. Gentleman must look at what is happening now as a result of all our efforts over the past 18 months, which his party and the Labour party have consistently opposed. Of course, I know—it is the one hope of the Labour party—that the man on the Clapham omnibus or the man in the Nottingham video shop does not think that he is enjoying the benefits of growth.
That is true throughout the western world. A joy-free recovery—so far—is not confined to the United Kingdom. A survey last week in the United States showed that 70 per cent. of the population in that country thought that it was still in recession when it has had four years of growth. In Germany, Helmut Kohl won only a narrow victory despite German economic recovery.
People everywhere in the industrial world are still hurt by the recession and find it hard to give credit for economic progress to their Governments. That is because this recovery is combined with low inflation. People in


Britain are not used to low inflation; they are used to the money illusion that made their houses seem more valuable and wages seem to go higher when inflation was high. They later found that it was a illusion.
Although we have a slightly sustained fall in unemployment, job prospects for many people remain uncertain. I realize—we all do—that that is what gives the Labour party hope that it can sow the seeds of fear in people despite our healthy economic position. I have no doubt—and the Labour party knows—that those fears will diminish as the recovery lasts, as it remains strong, as it delivers prosperity and jobs to men and women up and down the country and as we get used to low inflation and a modern jobs market.
As all those things happen, fear will transfer itself to the Labour party as people realise that the sneers and doubts that it is so recklessly expressing now will not cover up the lack of policy when we have achieved economic success.

Mr. Morgan: Could one of the reasons for the muted public reaction to the land of milk and honey recovery that the Chancellor talks about possibly be the strange phenomenon that for every rise of one in the number of people in employment, there is a fall of two in the total number of registered unemployed? Does the Chancellor accept that that has been the case for the past 12 months, and can he cast some light on that rather strange phenomenon?

Mr. Clarke: The labour force survey shows that the number of people in work is growing. It is true that demography has accelerated the fall in unemployment to some extent, but there are more people in employment. Britain has 70 per cent. of those available in work—the second or third highest in western Europe.
Our falling unemployment is on the back of growth—the rise in industrial investment and the strong export performance that I have just described. That is why we shall persist with the course that we are taking. That is why I shall take no risks with inflation, despite the usual views of the hon. Member for Dunfermline, East on interest rates. That is why I raised interest rates by half a per cent. at the first rumblings of possible inflation in September.
I shall certainly not be led by irresponsible views on inflation. That is why I shall take no chances with public finances and that is why I took the measures which reduced public sector borrowing and which were opposed by the Labour party. To take chances would put the recovery that we have already put in place very much at risk.
Of course, we must never forget who was in power when high inflation first became a fact of life. New Labour may claim no longer to believe in any of its own policies and principles, but the British people know in their bones that Labour would still be soft on inflation; it would be soft on strikes in support of inflationary pay claims; and it would be soft on public spending. The Government are determined to avoid boom followed by bust. Labour has only ever delivered bust in the past and it would deliver it again.
What of new Labour? Does it have a policy? Let us turn to inflation. There was no hint or mention of it in the hon. Gentleman's speech. Occasionally, the odd hint of Labour's financial policies slips out. There was a hint in

a speech that the hon. Gentleman gave a couple of months ago. I see him blush as he does not like to have the speech referred to, as it was the time when Mr. Balls tried to persuade him to give a serious speech on economic policy.
Tucked away among all the references to new academic theories that were actually justifying old-fashioned interventionism is the following bizarre sentence. I apologise to the House for its grammar; Mr. Balls does not appear to have proof-read the press release. Referring to the inflation target, the hon. Gentleman came out with the following profound remark:
A nominal objective has clear operational difficulties and which many academics and practitioners is both inflexible and necessarily out of date".
I am sure that the hon. Gentleman is relieved that attention was concentrated on other magic moments in his speech as he delivered his insights into where new Labour is going.
Can we at some stage—perhaps after the Budget—have some serious answers from the hon. Gentleman? Is our inflation target too high or too low? Would he keep an inflation target or would he have one at all? Does he or does he not believe in the use of interest rate policy to head off inflationary pressure, or would he abandon that?
It is one thing to set out Labour party policy in terms that were totally incomprehensible to an audience in the National Film Theatre. One day he has to come here and give in English at least one straight question to some of the answers that we have given—[Laughter.]or one straight answer to some of the questions that we have given. It was the mention of Mr. Balls that caused a momentary slip; I hope that nothing more is contagious.
People have to demand answers and then decide how sensible it would be for Labour to claim that it would have got underlying inflation down at all, let alone to 2 per cent., which is what we now enjoy.
Public finances have never been touched on in any serious way by the hon. Gentleman. Obviously, I shall have plenty to say about that next Tuesday in my Budget.
The Labour party is said to be no longer the party of tax and spend, but again there are elementary basic questions which in every speech the hon. Gentleman fails to answer. Is Government borrowing at the moment too high or too low? Should we be spending more or less? Should we be taxing more in total or should we be taxing less? Those are simple questions. No one who claims to take even a passing interest in economic policy should fail to have an opinion on any of those questions, but the Labour party has no answers to any of them, in either English or gobbledegook.
The Leader of the Opposition was quite unable to answer any of those questions. The hon. Member for Dunfermline, East is quite unable to answer any of them at Budget time this year. It is rather like someone bidding to be captain of the English cricket team when he does not appear to know which end of the bat the batsman is supposed to hold.
We in Government have answered all those questions; we are delivering steady, substantial economic recovery in which the financial and business world have full confidence. We are faced with a collection of sound bite merchants who do not have a idea in their heads.

Mr. Marlow: I am grateful for the courtesy of my right hon. and learned Friend. There is a depressing story goi[ng around the Lobby that our contribution to the European


Community for this year is being revised upwards by a massive £850 million. Could my right hon. and learned Friend tell the House whether it is just an unpleasant rumour or whether there is any truth in it? If there is any truth in it, can he say what the impact is likely to be on his estimate that next week's Bill, if it is passed, will increase our net contribution by yet a further £250 million?

Mr. Clarke: We have today produced a comprehensive document seeking to explain and improve the level of debate on the subject in the House and outside by a comprehensive explanation of our net contributions to the European Community both now and in the future. The total net contribution is notoriously difficult to forecast, but we have given the best forecast we can. We have also produced the trend of expenditure—which no one has ever denied is a rising trend-because, under the arrangements before Edinburgh, it is tied to 1.2 per cent. of our GDP. The GDP growth that we are enjoying now, and even our present modest inflation, keep taking up the cash total.
The figures that I gave for the Edinburgh settlement—£75 million next year rising to £250 million by the end of the century—are incontrovertible. The complex document to which my hon. Friend the Member for Northampton, North (Mr. Marlow) referred makes it completely clear that those are the only consequences from the Edinburgh agreement. To give an example of the scale of that particular additional contribution, it amounts to seven ten thousandths of the entire GDP of the European Union.

Mr. Marlow: rose

Mr. Clarke: With the greatest of respect to my hon. Friend the Member for Northampton, North, no doubt he and I will return to those matters next Monday when there is other business before the House—

Mr. Dennis Skinner: rose

Mr. Clarke: Perhaps the hon. Member for Bolsover (Mr. Skinner) has an insight into such matters. He may have expertise that he would like to give to the House.

Mr. Skinner: The Government may well be in difficulty in respect of the budget increase and we will have to see how events pan out. However, in view of what has happened on the international money markets over the past few days, what are the prospects for a 1 per cent. increase in interest rates before Christmas?

Mr. Clarke: As we wait to see how things pan out, it will be interesting to see how the hon. Member for Bolsover votes because his party—

Mr. Skinner: I have no problem there. I am against the Common Market.

Mr. Clarke: Could there be divisions in the Labour party on that matter? At the moment, the Labour party is waiting for my hon. Friends to tell it whether to vote and, if so, on what amendments. The Labour party may take no part in the debate next Monday. Labour appears to have no serious role to play. Labour will wait and see whether there is anything to vote against. However, if members of the Labour party Front Bench were to vote against the European Communities (Finance) Bill, they

would be voting against a proposition that they have consistently supported. Such matters of principle do not concern the Labour Front Bench.
I am not sure whether the hon. Member for Bolsover is a yobbo or an intellectual. He may be a unique combination of both. He might sort out the divisions with his colleagues. With regard to his point about interest rates, I have made it clear that, as he is aware, no Chancellor of the Exchequer speculates about interest rates. I have set out an extremely clear policy. Interest rates will be set according to a judgment of the prospects for inflationary pressures arising in future because if those inflationary pressures were allowed to run away, they would bring our recovery to a halt.
If I were to take advice from the Labour party, I should ignore all that. Interest rates would always be lower. As a result, inflation would rise and we should have to jack up interest rates much higher to regain control. Recovery would then begin to grind to a halt. That is the truth that lies behind the jokes, hollow rhetoric and fraudulent use of economic theories that passes as Labour party economic policy.

Mr. Gordon Brown: Will the Chancellor confirm that he has issued an updated forecast of the United Kingdom's contribution since the debate began? Will he confirm that his forecast shows that the Government have underestimated our contribution to the European budget? Will he confirm that the underestimate is, as the figure suggests, £732 million?

Mr. Clarke: The figures that I have produced are the latest estimate. The outturn compared with estimates for years gone by has never been reliable. However, they are the best estimates that we can make and those are estimates compared with the last estimates that we made. I have produced the figures today because I did not want to debate the Bill next Monday and produce the figures on Tuesday at the time of the Budget.
The hon. Member for Dunfermline, East will be aware that the trend revealed by the figures is the trend that we have always described. It is the trend that he knows follows from our membership of the European Community. It is a trend that he always supported. The addition from the Edinburgh ceiling is the £75 million next year and the £250 million or thereabouts by the end of the century. The Edinburgh decision has precisely the consequences which he has always supported and which no one opposed at the time of the Edinburgh deal.
However unpredictable may be the vote of the hon. Member for Bolsover, I hope that the vote of the hon. Member for Dunfermline, East will not change in respect of something that he has always supported.

Several hon. Members: rose

Mr. Clarke: We shall debate all those issues next Monday once hon. Members have had an opportunity to see the forecast. As ever, the debate about European finances is breaking out among a collection of hon. Members who seem merely to have picked up one figure from a 12-page booklet and who are anxious to transform that as if it has something to do with next year's bill, which it has not.
We must approach the economy seriously—

Mr.Morgan: With regard to Europe—

Mr. Clarke: No, we shall debate that next Monday.
If the markets seriously believed that I was about to be replaced by the hon. Member for Dunfermline, East or by another Labour Chancellor, the pound and bond markets would fall, long-term interest rates would rise and capital would flee the country. The British people would feel the hard practical consequences of those fears if they delivered the economy into the hands of a reckless party without beliefs or policies.
However, the British people will not be fooled at the next election. The thought of economic improvement towards the next election makes Labour Members' blood run a little colder and the hairs prickle on the back of their necks. Without the markets telling them, the public know that their job prospects would be worse under a Labour Government. The public know that from the evidence of their own ears.
Labour does not have a credible policy on taxation, public spending, unemployment or inflation. Labour's minimum wage would destroy thousands of jobs. The social chapter would drive businesses out of the country. Labour claims to be the party of partnership with business, but its regional development agencies and the windfall taxes are not partnership; they are old-fashioned state intervention.
Post-classical neo-socialism is all Labour has on offer. Labour speeches are either sound bites or meaningless econobabble. Sound bites, econobabble and good jokes do not deserve to win the trust of the British people at the next election when it is prosperity and jobs that are at issue. Labour will not win that trust in the face of substantial economic achievements and the steady confidence that is being restored month by month by this Government.

Mr. James Molyneaux: I am glad that the shadow Chancellor did not refer to me in respect of the group of intellectuals, as my hon. Friend the Member for Fermanagh and South Tyrone (Mr. Maginnis) is aware of the identity of an ambitious young man in my constituency who, when told in the year I was elected, "You've missed the boat, chappie" said, "No, not at all: Molyneaux, with his very limited ability, will be only a short-term caretaker"—that was 24 years ago.
The Queen's Speech commits the Government to
continue with firm financial policies designed to support continuing economic growth and rising employment, based on permanently low inflation.
We on this Bench welcome that pledge to continue a policy which has, for example, produced a drop in unemployment in Northern Ireland of around 5,500 in the past month, thus continuing a welcome downward trend throughout the year which has resulted in the lowest unemployment figure in Northern Ireland since 1990.
That trend is guaranteed throughout the United Kingdom in the wording of the next paragraph of the Queen's Speech:
Fiscal policy will continue to be set to bring the budget deficit back towards balance over the medium term.

Last year, in his usual forceful way, my hon. Friend the Member for Londonderry, East (Mr. Ross) expressed his and our dislike of public deficits. He looked forward to the time when we could resume repayment of the public debt. My hon. Friend doubted whether a nil deficit could be achieved before the end of the century, but I know that he would be happy—as would the Chancellor—if that objective could be achieved ahead of time.
It is always popular to advocate a reduction in interest rates, but in my view the Chancellor and the Bank of England may have to take the opposite course—particularly in view of last week's growth rate figures, which were the highest for six years.
I venture to tender further advice to the Treasury team. Schedule 2 to the Finance Act 1994 permitted gains on disposals after 30 November 1993 to have roll-over relief on reinvestment, but that provision does not cater for held-over capital gains to qualify for reinvestment relief, particularly in private limited companies. The effect would be that holders of such funds would be encouraged to invest in qualifying companies, and thus make badly needed seed capital available in regions of the United Kingdom such as Northern Ireland—and one can think of other relevant regions in the kingdom.
I wonder whether consideration could be given to making the whole of Northern Ireland an enterprise zone. The existing experiment has not been entirely happy. In the Ulster business and industrial community there has been a tendency for undertakings to move to what is simply the other side of an imaginary chalk line on a street and thus denude adjacent areas. Companies on the wrong side of the chalk line which are excluded from the enterprise zone then find it difficult to compete with companies within it and take themselves to locations outside Belfast where rates and overheads are much lower, taking with them much-needed city jobs.
A total Northern Ireland enterprise zone would create a dynamic economic driven by the private sector, not by Government, and would have an immediate effect on employment, especially in construction.
The Treasury team, I hope, will be glad to hear a no-cost suggestion. It is directed mainly at international business men who have been invited by the Prime Minister to his international investment forum next month. I understand that a great many of them have already accepted. Of course, we hope that investors will be convinced that the high standards of education, the Ulster work ethic and the infrastructure in Northern Ireland combine to make Northern Ireland an ideal place in which to invest and to put down roots.
Perhaps trade is more important than aid. Those who come to our Province for that forum in December might consider a three-year or five-year package whereby Great Britain, United States and European Community companies might each voluntarily agree to place, say, —250,000 a year of new trade with Northern Ireland companies. In the short term, that would be a terrific boost to the Ulster economy. It would be up to the Ulster community, by the wholehearted co-operation of all of us as individuals, groups and public agencies, to persuade those customers to become permanent clients of Northern Ireland companies.
Small and medium-sized enterprises—SMEs—could be dramatically boosted by what in Eurospeak is called "tax environment", without doing violence to the principle of


unitary taxation in the United Kingdom. There could be proposals aimed at reducing job losses during the transfer of prosperous SMEs. There is need for the further simplification of administrative procedures for SMEs. We really must improve SME access to European funding. There is much scope for job-creating programmes in sectors such as local services and the environment.
I now refer to what must be the main theme—trade, not aid. In the years to come, we must move in that direction in Northern Ireland. That is the challenge that we must meet.
The December joint declaration empowered the two signatories—the two Prime Ministers—to establish conferences and forums in their respective jurisdictions. Mr. Reynolds has established, within his jurisdiction, a forum for reconciliation, which has already had quite a few sittings. I gather that there might be plans for another session this week in an effort to reconcile those now at variance within the Dublin Parliament. Reconciliation with God and fellow deputies might be a worthy objective.
Within his jurisdiction, our Prime Minister, with the support of the leader of Her Majesty's Opposition, is convening the international forum to which I have referred. The Prime Minister has also convened a Downing street conference in January for all 26 council chairmen and chief executives in Northern Ireland to consider how better use could be made of the economic development units which we find in practically all 26 council areas.
Those two initiatives demonstrate the commitment of the Prime Minister and of Northern Ireland Ministers—I am glad that the hon. Member for Devizes (Mr. Ancram) is present—to advancing the work of restoration, of reconstruction and of rewarding what I persistently describe as the greater number of all religions and none who have proved conclusively that democracy will always win. I say "will" win because there is some way to go. The first step, and only the first step, has been taken by various paramilitary organisations.
When parliamentary colleagues ask me what will happen, I point them with some confidence to an assessment by my hon. Friend the Member for Fermanagh and South Tyrone (Mr. Maginnis) who on 11 July provided me with a paper before my meeting with the Prime Minister. It contained a prediction which has now been validated by events. It states:
To keep them happy the hard men will be allowed to infringe any ceasefire after the end of the 3-month period and once talks have commenced, on the pretext of taking 'only that defensive action necessary to protect the Catholic community'. Sinn Fein will of course, while understanding the provocation, regret such occurrences.
The validating events were the murder of the Newry postman and the nauseating excuses of a Mr. Adams who has not yet washed the blood stains off the hands he now holds out to the world as a man of peace. Although we may have to endure further terrorism, the victory of democracy cannot and will not be cancelled out, nor can the surge of constructive determination ever be extinguished.
In the context of this debate I sincerely convey Ulster's gratitude to all Members of the Parliament of the United Kingdom, of all parties, who have sustained us for 25 long

years. In return, we shall discharge the debt that we owe you—I think that I am entitled to include the Chair in that—by taking our responsibility to make Ulster a place of which we all can be proud.

Sir Thomas Arnold: It is always a pleasure to follow the leader of the Ulster Unionist party, with whom I have always had very friendly relations ever since I was a Parliamentary Private Secretary in the Northern Ireland Office many years ago.
In the 12 months since the previous Gracious Speech, we have seen a startling increase in transparency in the making of economic policy in this country. I refer, of course, to the decision of my right hon. and learned Friend the Chancellor of the Exchequer to publish the minutes of his monthly meetings with the Governor of the Bank of England. Nobody should underestimate the importance of that development. It will be difficult, if not impossible, for a future Government to go back on that decision and the consequences of that decision, which will increase as time goes by.
It is not simply that the minutes themselves are published; it is not simply that, the decision to increase or reduce interest rates having been taken by the Chancellor, the timing is then left to the Governor; it is the knowledge and the pressures which arise from that knowledge, in the markets and elsewhere, of the nature of the debate and the discourse between the Chancellor and the Governor which must have a profound effect on market perceptions of what the Government, in the broadest possible sense, intend.
I welcome that transparency, which I consider wholly consistent with the modern world, the political system in which we live and the many decisions taken in recent years with the aim of opening public life to much greater scrutiny. I hope for further progress in the same direction. I also welcome the greater autonomy conferred on the Bank of England; I hope that the majority of hon. Members support that decision, and will continue to do so.
In the context of transparency, may I draw attention to the continuing controversy—I think that that is the right phrase—surrounding the reports, and indeed the activities, of the panel of independent forecasters? I shall not comment on the panel's membership, which is none of my business, but I hope that my right hon. and learned Friend the Chancellor will allow it to continue to exist. So far he has indicated that that is his wish, and that he will not be put off by suggestions in the press and elsewhere that the existence of differences of opinion—to put it mildly—between the forecasters is a reason for winding up the panel.
I believe that, on the contrary, the fact that we can have access to the wide range of advice given to the Chancellor is itself a welcome contribution to economic debate. It can only add to understanding of economic policy-making and the options open to policy makers, and to an increase in general knowledge of contemporary economic policy issues. I personally enjoy the existence of such a divergence of views: I think that it makes the panel's reports both lively and—dare I say it, given the somewhat arcane subject matter—extremely entertaining reading. The fact that forecasters disagree with each other is not something to be deprecated, but something to be pondered and, indeed, debated in the House. I hope that my right hon. and learned Friend will retain the panel and be


patient with the more obvious disagreements; we can then try to pick our way through the arguments and find a sensible way forward.
Economics, after all, is an imperfect art, or science. No one can pretend to absolute knowledge, least of all the Bank of England itself. In the conclusion to its latest inflation report, dated November .1994—a further welcome exposition of the transparency to which I have referred—the Bank states:
The greatest uncertainty concerns the continuing difference between retail and producer price inflation. It is not clear how far price pressures will be passed down the production and retail chain.
I think it very sensible of the Bank to admit in that important report that the transmission mechanisms are imperfectly understood, and that there are nagging uncertainties. Its approach is far preferable to that adopted in the days when the Governor—or the Governor's eyebrows—supposedly told us everything that we needed to know about economic policy. The admission that all is not known is worth while in itself.
I thank the Governor for arranging for me to visit the Bank of England's Manchester branch on Friday. I have passed the building many times during the past 25 years, but have never set foot in it; I look forward to doing so. The Bank's agent in Manchester, like agents in other large provincial cities, is responsible for finding out what is going on in the local economy, and reporting his findings to the Governor and his colleagues in London. The connection between retail and producer price inflation mentioned in the report—on the basis of surveys, statistics and anecdotal evidence from, in this instance, the north-west—is clearly important, and I look forward to exploring the issues with the Manchester agent.
My experience of the economic recovery leads me to a view that I believe to be shared, in some respects, by the Chancellor, but I want to probe the Government further. I believe that deflationary pressures are still at work in the economy, and that there are few inflationary pressures. Our labour market has undergone huge changes in recent years, partly as a result of the supply-side changes of the 1980s and early 1990s; I do not think that, when we debate economic policy, we always pay enough attention to what is going on in what I would describe as the engine room of the economy—the labour market. There has been a huge structural increase, for instance, in the amount of part-time earnings, especially those of female workers. We should take account of such changes when registering our view of what is happening.
At any given moment, a snapshot of the economy will be imprecise. Members of Parliament must therefore rely on knowledge and experience of local circumstances, as well as what we can glean from the official statistics. My conclusion from observation of life in the north-west is that there is still excess capacity in the economy. I was surprised to hear the hon. Member for Dunfermline, East (Mr. Brown) say near the beginning of his speech—at least, I thought I heard him say it—that he thought we were running up against capacity constraints. I find that very odd; how can the hon. Gentleman berate the Government for not lowering unemployment fast enough, pointing out that regrettably 2.5 million are still unemployed, and in the next breath say that we are running up against capacity constraints? It does not add up.
As I have said, I believe that there is still excess capacity in the economy, and the Chancellor admitted as much during his last Question Time. I should like to hear this evening whether that is still the Government's view. If there is still excess capacity, we should not be panicked into altering interest rates by a neurotic obsession with one day's events. I congratulate my right hon. and learned Friend on his cautious handling of monetary policy, which I consider admirable; I sincerely hope that he will maintain his stance, taking account of the mixed signals that he is receiving but recognising that we are living in a generally deflationary world. He should resist any knee-jerk temptation to raise interest rates simply because he receives a signal from the markets on a particular day suggesting that such a move is called for.
We should also take account of the huge increase in productivity, and the huge change in the inner workings of the labour market. The deflationary pressures at work in the economy are reinforced by further deflationary pressures from overseas. Our country, together with the other OECD countries, is now under severe new pressures from the emerging markets, particularly—although not exclusively—in Asia. Low-cost producers in those countries can exert on our manufacturers competitive pressures that we have not experienced hitherto. We are moving into a new world, and it is most unlikely that those pressures will go away: that is why the supply side changes of recent years are so important, and why it is also important not only to recognise the existence of greater flexibility in the British economy, but to welcome it.
Our economy has shown a remarkable ability to adapt to changing circumstances in the past few years. We should not be ashamed of that, or defensive about it; we should realise that the pressures from the far east and elsewhere with which we are now having to cope are likely to be with us for a long time.
I would welcome an expression from the Minister today of whether, broadly speaking, the Treasury supports my analysis of what I have referred to as the deflationary pressures which are still at work on our economy, and whether it believes that the inflationary pressures referred to in the financial press and elsewhere may have been exaggerated.
The Bank of England inflation report is optimistic on inflation. The current prospects for inflation are better than we have seen for many years—low inflation, a situation in which we can continue to look forward to a steady recovery of a non-inflationary kind and the firm financial policies to which the Gracious Speech refers are, I believe, the best possible bases for sustaining our recovery up to the next general election.

Mr. Malcolm Bruce: I was interested to hear the Chancellor of the Exchequer's insistence that he was extremely prudent and very cautious, and would do nothing whatever, regardless of the political fate of the Conservative party, that might be considered risky in advance of the election. But no hon. Member believes a word of it. We all recognise what the Government's agenda is.
There is no doubt at all that at the moment we are enjoying a recovery which is welcome, even if tit is somewhat shallow. But I find it a little strange to hear Ministers, and the hon. Member for Hazel Grove (Sir T.


Arnold), speaking about the need for low inflation and sustained growth as if they had just come to power and were sorting out the mess of the previous 15 years. It is because they have failed to deliver on their economic policies for the past 15 years that the country is fundamentally fed up with them.
In 1979, we were told that all that wOas needed was to cut public spending, cut taxes and deregulate, and that that would create an engine for growth which would make the British economy the most competitive in Europe. But if one takes the main long-term indicators, all the problems that the Government analysed in 1979 are fundamentally still there. Perhaps the one change, a cultural one, has been within the reforms in the trade union movement, which are now generally welcomed on all sides.
In an exchange with me, the Chancellor said that the level of investment was rising, but it is rising from the lowest level of investment as a percentage of GDP in our entire history. If it is not rising now, for heaven's sake, when will it ever rise? But it does not strike the right chord when the Chancellor says that there is underlying long-term sustained confidence.
Inflation is low, and that is welcome. We do at least have a semi-independent Bank of England, which can pursue policies to try to keep inflation under control. But there is some disagreement even about the inflation target. There is a target range and a target within a target, for which the Bank of England seems to have chosen a figure slightly different from that chosen by the Government. That does not at this moment make for a particularly tidy working arrangement.
In reality, it is too early to say that we have the foundations of long-term low inflation. One of the consequences of that low inflation—it is an incidental one, and I am not sure that there is anything that the Government can do about it—is that many people, particularly business people, are rooted in a finance structure based on the security of property which has fallen sharply in value and which has little prospect of recovering its value in the short term.
That should be used as a cultural opportunity for rethinking how we secure investment and finance in Britain in future, and perhaps, as suggested to me by some German industrialists last week, persuade people in Britain that it is a good idea to invest in business, and that perhaps that should sometimes put priority on investing in bricks and mortar. There is scope for much cultural rethinking in Britain which is long overdue, the impetus for which does not appear to be coming from inside the Government.
There are, as the amendment in the name of my right hon. Friend the Member for Yeovil (Mr. Ashdown) and my hon. Friends says, a number of serious omissions from the Government's economic strategy. There is no strategy for promoting sustained long-term investment, and investment is too low. It is our contention, and has been now for a considerable time, that the most important single investment needed in Britain is in our people-in education and training. That is the one thing that can lay the foundations for competitiveness. Our relative performance on education and training is well behind that of all our major competitors.
There is also scope for doing something to narrow the gap between rich and poor, which has become so much wider under the Government. Because they have failed to create the climate for the growth they promised, they have had to raid one section of the community in order to finance their election promises to another section. The division between rich and poor has been increased, without any fundamental increase in the welfare of the community as a whole. We need some radical changes in those areas.
Britain needs political changes that can remove us from the kind of spat we saw tonight, when there is simply a scoring of party political points about what should be Britain's national interests. [Interruption.] It is interesting that that should cause ripples of mirth on both sides of the House. But when one speaks to leading players in the economies of other countries, one finds, despite political differences, an underlying commitment to what constitutes the real well-being of the economy. It is a sad admission that such a constructive consensus cannot be found here. Rather, it has been positively attacked during the past 15 years.
There is room for changing the structure of the Bank of England. We propose that it should become a United Kingdom reserve bank, drawing its policy makers from a much wider base than now. It should be given operational independence and a clear, coherent, simple range of inflation targets, set by the Government but pursued independently in an operational sense by the reserve bank.
It is also important to point out that the situation in our balance of payments is not quite as good as it appears. First, it is still in deficit, so that is not too healthy. But if one takes out the £2 billion extra oil surplus we enjoyed in the first half of this year, and the overseas net property income, one sees a deterioration in our non-oil balance of trade.
It may be reasonable to say that we have sold that oil and it has created revenue, but it has always been accepted that that is a special factor, and the reality is that we are pumping oil out of the North sea faster than we ever did before in order to try to maintain an economy which is not making enough of other things of real added value—it is, after all, only a raw material—and that will lay the foundations of long-term competitiveness.
The Chief Secretary to the Treasury, perhaps unbeknown to the Chancellor, said, in reply to a question on 27 October:
Total business investment is up by more than 30 per cent. since 1979, totalling about £60 billion in the past year, of which investment in manufacturing is currently running at £11 billion a year compared to £13.6 billion in 1979."—[Official Report. 27 October 1994; Vol. 248 , c. 999–1000.]
There has been a clear, continuing decline. I do not want to enter into the argument about whether we need goods or services. We need both, but our manufacturing sector is not performing well enough to deal with our balance of payments problem or our long-term competitiveness. Added value requires goods that can be traded round the world.
The hon. Member for Dunfermline, East (Mr. Brown) referred—I was unsuccessful in intervening—to windfall taxes. The first interesting point was that, at the end of that exchange, there seemed to be agreement on both sides that there could be something called a windfall profit.


Windfall taxes were originated by the Conservatives, who now find themselves being beaten by a Labour shadow Chancellor—

Mr. Streeter: Will the hon. Gentleman give way?

Mr. Bruce: Let me finish my point first.
It was argued in 1981 that the banks had made excessive profits because of the prevailing rate of interest rather than any performance of their own. I do not notice Chancellors intervening when excessive losses are made because of changes in circumstances and offering to reinstate windfall profits.
But the hon. Member for Dunfermline, East is saying that, because the privatised utilities have a privileged position in the market, because they have a monopoly, they should be taxed on their excess profits. He is right to identify that something should be done about those profits, but I do not agree with his solution. If there is agreement on both sides that excess profits have been made, the question that then arises is, from whom? The answer is that they have been made from the consumers, and the money should go back to them. They should be returned to those from whom they were made.

Mr. Streeter: The hon. Gentleman is talking about windfall profits and tax thereon. Has he calculated the excise duty that might be raised on the legalisation and sale of cannabis, which I understand to be Liberal Democrat policy? Is that how the hon. Gentleman would fund his excessive spending plans?

Mr. Bruce: I shall not waste time talking about the costings of a hypothetical situation that does not accord with my party's policy.

Ms Hilary Armstrong: Will the hon. Gentleman give way?

Mr. Bruce: I shall not give way on a point relating to the intervention of the hon. Member for Plymouth, Sutton (Mr. Streeter).
If the Government recognise that there are such things as windfall profits because privatised utilities are not operating in a genuinely competitive market, surely such profits should be returned to the people who enabled them to be made—the consumers—and genuine competition should be introduced into the market, so that the regulator is not left as the last resort to intervene to ensure that that happens.

Ms Armstrong: Does the hon. Gentleman accept that it is precisely because the Labour party considered to whom the profits should be returned that it proposed a windfall tax? The taxpayer provided and built capital for the industries to which the Government extended excessive capital tax allowances on privatisation. We believe that the taxpayer was done out of a great deal of important money because of the manner in which the Government privatised industries in the first place.

Mr. Bruce: As someone who instituted a debate on the money resolution on the Bill that led to the privatisation of the electricity industry, which the Labour party was willing to allow to go through on the nod, I do not need lectures from the hon. Lady on the circumstances in which privatisation took place.
My argument is that, fundamentally, the profits that are now being generated are at the expense of gas and electricity consumers. They are the people who should benefit from the windfall. I hear nothing from the Government on electricity, or from the Labour party on gas and electricity, about making the markets genuinely competitive. That concerns me.

The Minister of State, Treasury (Mr. Anthony Nelson): The hon. Gentleman makes a fair debating point, but perhaps it is also fair to ask him to explain exactly what he means. Is he supporting the hon. Member for Durham, North-West (Mrs. Armstrong) and the Labour party generally? If he says that windfall profits should be taken hack and redistributed to the consumers, ES he supporting the case for a windfall tax—yes or no? if he is not, is he suggesting a price mechanism or another structure for redistribution?

Mr. Bruce: That is a helpful intervention. Liberal Democrats are not supporting a windfall profits tax, for the reason that I have put before the House. If one believes in a market economy, that sits rather uncomfortably with picking and choosing the industries that are thought to be making excess profits and imposing excess taxes upon them. My party suggests that the moneys should be returned to the consumers. The regulator mechanism was set up by the Government, and it could be amended by the Government to ensure that rebates were given to those who generated excess profits initially.
I move on to the competitiveness, or lack of it, of the United Kingdom internal economy. The issue arises from the Government's privatisation programme. It is interesting that the deputy chairman of the Conservative party, Mr. John Maples, suggested that the programme had been a dismal failure in terms of popularity. It appears that it has not struck a deep chord with the people, and that it is not one of the things they want.
Large corporations that were in the public sector have been transferred to the private sector without the corresponding development of a genuine free market mechanism. That must be recognised and understood if the privatisation process is to be completed in a manner that will give people confidence. That will mean that the chairmen of the industries involved will not secure massive increases in their salaries.
They are doing so at present because their industries are not operating in a genuinely competitive environment. At present, it is too easy for them to make the sort of profits that keep shareholders happy without displaying the same degree of enterprise that would be necessary if they were operating in a freer, open and rnore competitive market.
The Government seem to have no drive in resisting takeovers or in examining concentrations of economic power within the market place. The past six references to the Monopolies and Mergers Commission have emerged from that body without further action being taken. Those involved are beginning to wonder whether the MMC is prepared to operate in a way that will ensure that people who are trying to consolidate their position within the marketplace will be faced with a genuine analysis of whether what they are doing is anti-competitive.
The consequence of the build-up of competition is a greater distortion between large and small businesses within the domestic market. The performance of the small


business sector needs to be dramatically improved if the overall performance of the economy is to improve. Small business formation has increased, but the survival rate has deteriorated. There is not much purpose in founding small businesses if they do not live to be successful, profitable and established.
Several actions need to be considered to ensure that we have a much more vigorous and successful small business economy. Small businesses constantly complain of their inability to gain access to competitive finance on the same basis as many of their larger customers, on which they depend for their business.
A small company business man came to see me recently—this is a simple anecdote—who is in the plant hire sector. He told me that he had had his best business year for five years but had laid off three of his five employees because he could not afford to pay their wages. That was because his customers were taking three or four months to pay him. He was aggrieved because his customers, almost without exception, were receiving money from their creditors on cheaper terms and with less security than he was forced to offer to extend his overdraft even to fund his basic working capital. That is something that should not be allowed to continue.
My party would support measures to deal with late payment, along with legislative enforcement. It would like to see the creation of regional investment banks from which business men could gain access to finance on competitive terms, as well as advice on how to manage their businesses and training to enable them to run businesses successfully.
There are many people with skills who do not necessarily have particular skills to run a business in a way that ensures that it does not fall into financial difficulties. They must be made aware of how to meet their commercial and legal obligations. Other countries provide this training rather better than we in the United Kingdom and, as a consequence, have a much more successful business environment.
I ask the House to accept that the Government cannot rely on statistics that relate to the past 12 or 18 months as a justification for the failure of the past 15 years. They do not amount to evidence that we have finally achieved a fundamental turnround in the performance of the British economy. If that were the position, investment would presumably be at a record high, not a record low. We would then see a situation in which the country was beginning to lay down the foundations of economic wealth, which would enable us to achieve what I believe would command support from right hon. and hon. Members on both sides of the House—lower taxes while maintaining funding to the public services.
As long as the Government fail to deliver the economic cake, the stronger is the case that it is time for them to go. The answer is not to raid one part of the cake to provide for their supporters. They, and their supporters, have found that that is not a sustainable strategy. It has not carried the Government through even the first half of a Parliament, and it will not be accepted that it is the foundation for the next general election.

Sir Edward Heath: We all listened with great interest and understanding to the right hon. Member for Lagan Valley (Mr. Molyneux) when he turned to the section of the Gracious Speech that relates to Northern Ireland. My right hon. Friend the Prime Minister has acted with great skill in his handling of the matter. He has been absolutely right in his timing when dealing with the various proposals that have been made. He has displayed caution, and that is surely essential in such a situation.
So we watch the process with great interest and hopefulness. At the same time, we all realize—at least I hope we do, and I am sure the Prime Minister does—that a very difficult situation could arise as the talks progress. That would happen when they reach the question of the unification of north and south. We have had to face that problem before, as we did in 1973, and it is inescapable that those at the conference will have to face it again.
When it appears that unification is not possible, what will be the reaction of those who have been the cause of so much strife and distress in Ireland over the past 25 years? That is the crucial question. I do not doubt the capability of the right hon. Member for Lagan Valley (Mr. Molyneaux) to handle that and to handle his party, but I hope that the British Government recognise the immense dangers that could beset us when we reach that point.
If the hard core of the IRA decide that they have been holding their fire to see whether their aim can be achieved and they see that it is not being achieved, what will their reaction be? We have to be prepared for that, and I hope that the Government, especially the Secretaries of State for Defence and for Northern Ireland, are taking all possible precautions. That is why I believe that the Government must act with skill as well as with caution.
On the economy, I congratulate the Chancellor of the Exchequer on the course that he is following. He too is displaying great skill as well as steadiness. The Queen's Speech as a whole shows that the Prime Minister and the Government want a period of stability rather than constant change; they have learnt the rather painful lesson of recent events in our country.
The Chancellor has been successfully following that policy, and has stood out against the various proposals put to him. In particular, he has stood out against giving undertakings to reduce taxation. In that he is absolutely right. I have said before that no Chancellor of the Exchequer should ever give undertakings about raising or decreasing taxation, any more than he should give undertakings about increasing or decreasing interest rates.
I found the speech by my hon. Friend the Member for Hazel Grove (Sir Thomas Arnold) fascinating. I agreed with a great deal of it, but where I disagree, of course, is on the public examination of such matters with the Chancellor of the Exchequer. He was landed with that; he did not choose it himself. To have the committee discussing its views with him and advising him, and then telling the press exactly what its views are and what it has advised, is most undesirable. Those people have plenty of ways of advancing their views and taking part in discussions, without their being given the official sanction that they now have.
I believe that having those people around weakens the Chancellor's position. The same applies to the publication of the minutes of the meetings between the Governor of


the Bank of England and the Chancellor. That will lead in time to speculation about who will win the battle. If there is a battle of various schools over interest rates, people will ask whether the Chancellor or the Governor will win. That too increases speculation, and that is undesirable.
If, as has been suggested, we had an independent Bank of England as a regional part of a European bank, that would be different. None the less, an independent bank would not call in the press all the time and say, "These are our views," any more than the Federal Reserve Board in Washington or other independent banks do. The Bundesbank does not call in the press in and say, "We have been thinking about this or that"—not for a moment. However interesting such things may be to the specialists, they should be kept inside. The Chancellor should be allowed to reach his own conclusion, and people can criticise him afterwards.
I do not believe that the Chancellor should accept views put to him in that way, especially on the level of taxation. He is under great pressure from some of his hon. Friends to say that he will reduce taxation, and he is wisely resisting those pressures. I hope that he will continue to do so. Similarly, today he was pressed to say what he intended to do about interest rates, but rightly he resisted. The action that he has taken so far on interest rates has been strong and he has stood by it, as I hope he will continue to do.
That is especially important now because of the indecision—I almost said "tumult", but let us reduce that to "indecision"—in the United States. A new situation has arisen there with total Republican control of Congress. What will the Republicans' attitude be to internal affairs—interest rates, inflation and so on? What will they press the Fed to do? I believe that they may be rather more in tune with it than the Democratic Congress was. All that will affect the rest of the world, including us, and the Chancellor will have to take that into account in making his decisions. I am sure that he will do so.
The Chancellor rightly said that he could not deal with questions about the Budget today, and I do not want to try to give him lectures on that subject.
One thing that has always worried me is the Child Support Agency. In our constituencies, we all hear about the agency constantly. Many people arrived at my advice bureau last week with problems relating to it. The Government have said that they will review it and try to remove the impediments, but meanwhile the agency is causing agony to many people, and we know that its effects have included some suicides. There is a feeling of great unfairness.
According to the figures produced by the Child Support Agency for 1992 to 1994, £418 million saved in benefits has gone straight to the Treasury, and only £15 million has gone to help in any way those affected. That is an extraordinary relationship. I do not think that, when we passed the legislation, we realised that, with almost 90 per cent., if not more, of the money raised, it was a question of putting funds into the Treasury. I admit that I did not know that. The matter needs a fresh look and speedy action.

Dame Elaine Kellett-Bowman: Does my right hon. Friend not accept that it is the parents who should be looking after their children, not the parents of

other children, who have their own responsibilities? The money has to come from taxpayers who are themselves parents, so the position seems to me perfectly fair.

Sir Edward Heath: I do not think that the way in which things have been done is fair. For example, I take great exception to the fact that parents who have settled their affairs in a court of law, have been told to pay a fixed sum and have carried out their obligations right from the beginning now find themselves suddenly landed with paying a very large sum.
I heard of a case last week in which the father had been notified of the amount that he had to pay. The agency said that it wanted an answer from him within a fortnight, and he sent his reply back immediately, in March. Although the agency promised to reply, it did not do so until October. It told him what he had to pay and then, a week later, he received a letter saying, "This is what you owe in arrears since we first wrote to you in March." That is intolerable, and I do not understand why the Government cannot deal with it, and at least stop such things happening. I cannot accept that that aspect of the agency's work is fair.
I was most interested to hear what my hon. Friend the Member for Hazel Grove said about the conditions of the market and the situation that has arisen concerning the head of British Gas. I say openly that I condemn the chief executive, for a number of reasons. I once had to use the phrase
the unacceptable face of capitalism"—
or at least, I did not have to use it, but I did. It is one of the two quotations from me in "The Oxford Dictionary of Quotations".
To me, what is now happening is the unacceptable face of post-privatisation. I condemn it because it shows that the chief executive has no understanding of the relations between his corporation and the public. He did not understand the reaction that it was going to produce in our fellow citizens, the press or elsewhere. First, he said that he was going to go ahead with it, but I have seen reports that he is now going to give it back, or to somebody or other. That shows a rather delayed recognition that he was in the wrong.
The other reason why I condemn it is that it does great harm to private enterprise as a whole. Those who want to cause harm to private enterprise are given an immediate weapon which they can use, and he ought also to have recognised that at the time.

Mr. Alan Duncan: Does my right hon. Friend not accept that he himself has just used that weapon against the chairman and chief executive of British Gas who, far from taking a 75 per cent. Rise—as we have read in the papers—have recognised that, in a monopolistic company, there is no particular link between risk and reward for chief executives and that, in a spirit of openness, they have done away with lots of perks which they previously had and rolled them up into one open cash package, and have therefore pioneered openness in the way in which these salaries are set? Has not my right hon. Friend fallen for the mass of propaganda against what is the fair treatment of a chief executive?

Sir Edward Heath: I do not accept that, and the chief executive ought to have realised what was happening at the time.
The hon. Member for Gordon (Mr. Bruce) mentioned that gas is not in a free market economy and that it is not up against all of the competition. We all know perfectly well that people who have gas supplies cannot afford to start switching over to other supplies of energy. In fact, British Gas is very largely a monopoly organisation and we must take that into account, as must the regulator.
The other question which has been raised is labour in the economy. The Chancellor has rightly emphasized—I think he has used the phrase "a modern workhouse"—that the modern situation for the labour market is quite different from what it was. The question is, what should be done about it?
One sees that people who were formerly in established positions, and who accepted them as such when they started their careers, are now entirely insecure. In my constituency, bank managers who thought that they were there for life and who are very skilled have been sacked at the age of 48. How do they make a fresh future in the labour market? That is a practical question, and it can only be answered by a Government, and a Department of Employment, who are prepared to think it through and organise solutions.
The solutions will not come from private enterprise. It is not in their interests to do so, and, in any case, they will say that they cannot afford the training which is necessary if we are to expand industry as we want. I hope that the Chancellor will succeed in persuading Government organisations to analyse the change, and see how it can be dealt with satisfactorily.
It is said that anybody leaving university in the United States can reckon on having three careers, and at each stage he is trained for the next one. There may be a considerable amount of truth in that. We cannot do anything of that sort—we hardly have any provision for it—but we ought to be thinking in those terms in the long term.
In saying that, I ask myself what the television viewer is thinking about the debate this afternoon. He could not really find anything about the debate to satisfy him. We sit in the Chamber, and we jump up constantly. Nobody on the Front Bench can any longer deliver a speech, as there are an enormous number of interventions. Hon. Members who intervene are not trying to find a solution, but are trying to find some way of knocking the other chap down.
The most distressing thing about the present situation is the loss of confidence of our citizens in this Parliament as an organisation and as a system, and the only people who can put that right are ourselves. I hope, therefore, that we can perhaps give some thought to the way in which we behave in the Chamber. People want to know what ideas we have, and not hear us constantly throwing back what happened in 1938 or 1949 to try to make capital out of the other side.
We have had the publication of Mr. Maples's manifesto. I do not want to say too much about it, as I no longer get mixed up in party affairs. [Laughter.] I have great admiration for those who are now responsible. The only thing I would say is that I do not understand how a deputy chairman can be appointed who is such a

simpleton as to think that he could put all his views on paper and nobody else would ever see them. He must be an absolute simpleton.
We live in an age of leaks. The press used to complain to me that the trouble with my Government was that nobody ever leaked, and that they could not get stories. I was told that we had to change it. We did not, but now everything leaks, and Mr. Maples's views have all come out. He stresses in his analysis that people everywhere are suffering fear—fear of unemployment coming to them, fear of their health going when they get old, and fear about housing and whether they will be able to complete their mortgage and if they will be thrown out. If they are thrown out, where will they go? All aspects are governed by fear.
In support of Mr. Maples—and he needs support—I would say that I hope we take notice of his analysis. The views of the party's former supporters up and down the country were taken. Let us take notice of them, face up to them and say what we will do about each aspect of that spread of fear. That fear cannot be countered by contrary debate in the House, which will not give the citizen any release from his fears. He will go to sleep tonight, if he can sleep, with exactly the same fears he had before we began the debate.
When it comes to Mr. Maples's solutions, I repudiate them absolutely. I am disgusted with some of his proposals for inter-party warfare, yobbos and trying to trick people into positions. Those views are completely unjustifiable. I hope that the Prime Minister and the chairman of the party will repudiate all that as quickly as possible.
The fact that those views have been put on paper is already doing us immense harm in the country. I know that my supporters—such as I have—are disgusted by the idea of how we should play the party game. It has never been our case before, and I hope that it will not be in the future. It will be a big task to deal with the removal of fear, and whatever party is in power must tackle it.
My final object in this speech is to connect the economy briefly with other aspects of the Queen's Speech—defence and foreign policy. I believe, that at the moment, there is a big gap between the departmental approach and Government thinking. In a speech last night, the Chief Secretary said that we must emphasise a worldwide approach. We can no longer carry on a worldwide approach. We do not have the economy to do that. We cannot compete with other organisations which have a worldwide approach, and not many organisations have that approach. Unless we are in the European Union, and playing a full part in it, nobody will take any notice of our worldwide approach anyhow.
We must look today at the situation in the former Yugoslavia. Are we gradually being dragged further into an active war? If so, what are the justifications for that? One may say that NATO is involved, but organisations which are there for a purpose always feel that they should be carrying out that purpose. That is not what we want from NATO, and the situation must now be watched carefully. How much further are we to be dragged into this conflict?
On defence, we must have a much clearer idea, through Europe and NATO, as to our defence purpose in this new world. In defence terms, this is not the old world of the two super-powers and the nuclear threat—perhaps by


carelessness that threat is still there—but a new world. We cannot think that we can run the Pacific and the Atlantic, dab in Africa whenever we feel like it, and maintain our position in Europe. That is completely unrealistic. It is sad that it has taken our country longer than any other since the second world war to recognise that change in the power structure of world affairs. We must recognise it.
That change has its impact on the economy because of the cost of defence. If one tries to do everything all the time, the costs are tremendous. I hope that the Chancellor will face up to that when dealing with those who want us to have a worldwide defence role to show how important we are.
We must not forget the trade implications of foreign policy. We must make some radical changes, because we are losing out. We can say that our exports are going up, but if the Chancellor's predecessor had accepted the advice to go into the European exchange rate mechanism in 1985, when the rates of exchange for the mark and the dollar were almost exactly what they are today, we would not have had so many of the problems that we have encountered in the past 10 years. He was, however, overruled by the Prime Minister of the day—a ghastly and expensive mistake.
We can say that our exports are going up: well and good, but in comparison with what is happening in other countries, that rate of growth is small. It is not enough for us to maintain our position. If one looks at the rest of the world, we are dabbling in foreign policy at the expense of our trade and our economy. That must stop.
Let us consider the People's Republic of China, with which our relations are the lowest they have been since 1972, when I established full diplomatic relations. That country is flourishing and is expanding at the rate of 12.5 per cent. every year. It is attracting enormous investment. The Chinese will not accept any technological investment unless it represents the latest technology. Last year, I opened a plant in China for one of our biggest firms. The chairman took me to one side and told me that that plant was far more up to date than our own at home.
We must recognise what is going on there, but, alas, too few of our people do. Japan, the United States, Germany and France therefore conduct far more trade with China than we do, but we were the first in. Our trade with China is almost insignificant. People may argue that that trade is increasing, but it is increasing from such a low level that it will never reach anywhere near comparison with the trade conducted by those other countries.
What about more controversial trade, such as that with Iran? People may say that Salman Rushdie had the right to write a book, but I do not believe that it is necessary for us to damage our trade and our relations with Iran because the Iranians took offence at a religious book. They are entitled to take offence, and their religious people can do so.
It is a complicated issue, so I will not go into at the moment, but there is no point in just saying that we should do nothing, because we could do valuable trade with Iran. The trade that is done now is nothing like what we could

get. The same argument applies to Libya. Two suspects live there, but no one can be absolutely sure that they are guilty, yet we have no relations with that country.

Mr. Richard Shepherd: This is a modest intervention, as is the intention behind it. I find the characterisation of the situation in which a British author, a British citizen, finds himself a very unhappy one. I accept that much, if that is what my right hon. Friend is saying, but it is intolerable that, as a result of a fatwah, a United Kingdom citizen is under threat of death. We expect the instruments of our Government to defend our citizens in such circumstances.

Sir Edward Heath: That means that he gets the protection that the Prime Minister and others get. He can be protected—

Mr. Shepherd: Absolutely.

Sir Edward Heath: But that does not mean that we must stop our trade. That is my point—we go too far in such matters. In any case, Salman Rushdie has the answer; he could give an apology quite simply, and say that he did not mean to insult the Muslim faith. That would have settled matters, but he did not offer that apology. Now we have a situation in which the death decree was laid down by the head of the religion; he is the only person who can remove it, and he is dead. That must test the ingenuity of the Foreign Office a little.
Apart from Libya, we also have the continuing problem of Iraq. Iraq is now complying with United Nations resolutions in turn and that compliance should be recognised, just as it has been recognised in Serbia. If people start to accept UN resolutions and that is confirmed by a UN organisation, we too should accept that and say, "Okay, you are moving on the right path."
The obvious cause of the problem with Iraq is that the Americans can never forgive themselves for not having got rid of Saddam Hussein. They had no authority from the UN to do so—no one had—but that failure governs American policy all the time. It shows a complete misunderstanding of the problem, because the more Iraq is attacked, the more Iraqis will support Saddam Hussein.
We are in the position to learn the lesson of Nasser and Egypt. We were determined to get rid of him, but we failed, and he remained in power for another 18 years. Look at the damage he did to us. Everyone else went in and took all the trade and the business. We should learn from such events.
We should continue to get the Iraqi resolutions carried and show the Iraqis that, when they accept them, things will change, particularly for the people of Iraq. I feel for them most strongly, because millions in that country are suffering enormously. The children are not getting properly fed, and the hospitals do not have the medicines to deal with sick people.
People may argue that that is their fault, because they should get rid of Saddam Hussein, but that is completely unrealistic. How can they get rid of him? They cannot say that they will have a general election in six weeks' time and vote for another person. They cannot possibly do anything like that. The more that Saddam Hussein is attacked, the more the people will dig in and support him. We should think about the people of Iraq.
I have always supported sanctions, right from the days of the Italian invasion of Abyssinia. One must look carefully at the whole business of trying to bring about results through sanctions, without any regard for the impact on people of the country, and consider whether that policy reinforces that attitude or not. We should take a good look at our policy.
I hope that the Foreign Office will take an entirely fresh look at the world from the point of view of how we support trade and investment for our industry and all the facilities that industry requires. The petty carping about the amounts spent by embassies on entertaining should stop. In 30 years' connection with the foreign service, I have never yet met an ambassador who wanted to entertain for the sake of it. All ambassadors entertain to support some national cause; the last thing they want to do is indulge in private entertaining for its own sake. They are only too glad to get a night off. Such carping does us no good, and does infinite harm among people who understand such things. We must support that Foreign Office policy.
We will be able to discuss Europe on Monday. We have already had a typical outburst tonight in which an attempt was immediately made to falsify the figures. The Chancellor has already cleared up the amount that goes to Europe.

Mr. Marlow: Will my right hon. Friend give way?

Sir Edward Heath: No, I am sorry.

Mr. Marlow: What was the falsification?

Sir Edward Heath: My hon. Friend can read Hansard tomorrow.
We are hypocritical, and that is what infuriates our fellow members of the union. We damn extravagance and waste, but those partners then read the British press and see that the Government put £40 million into a private hospital which has gone bankrupt, so the £40 million has been lost.

Mr. Gallie: Will my right hon. Friend give way?

Sir Edward Heath: No, I am sorry. We can discuss the European Union on Monday, and after that we can discuss the Budget.
I conclude by congratulating the Chancellor. He has been very steady. I hope that he will remain firm, because that is how he will best produce the results for us.

Mr. John Cummings: I am pleased to have caught your eye, Mr. Deputy Speaker, in order to make a brief contribution to this afternoon's debate on the Gracious Speech.
I am also pleased to follow the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). During the miners strikes of 1972 and 1974, which we fought bitterly, I never imagined in my wildest dreams that I would face the right hon. Gentleman across this Chamber. The battles of 1972 and 1974 were fought honourably and the miners gained tremendous benefits, one of which was a free pit

helmet and free pit boots for the first time in our lives. I shall discuss that later when I deal with my local economy.
Much has been said this afternoon about the global, European and national economies, but to the people whom I represent the most important is the economy in the district of Easington. Since 1979, we have lost about 15,000 jobs and 10 collieries have closed. We have seen the demise of the coal mines and of the Peterlee and Easington coal mines development corporation, the only development agency in the area with direct access to central Government funds to build and manage huge industrial estates. It succeeded in attracting some 9,000 jobs into the area. Unfortunately, the Government, in their so-called wisdom, decided to abolish the corporation six years ago.
In the past 18 months, Ministers have proposed the establishment of 235 acres of enterprise zone within Easington district. During that period, we have seen the closure of collieries at Easington, Dawdon, Vane Tempest, Seaham, Murton and South Hetton, but no decision has been made about the enterprise zone. I appeal to the Minister to make a determination immediately. Our superb east Durham task force, the county council, the district council and East Durham development agency have fine teams of men committed to regenerating and strengthening the local economy.
Vane Tempest colliery closed in 1992. A report prepared by the Coalfield Communities campaign, an all-party organisation, stated:
The survey carried out at Vane Tempest shows that 52 per cent. of the men are still out of work over a year after the closure was announced. Only 28 per cent. are in paid employment or have set up in business for themselves. Moreover, the majority of those men who are now working have experienced a drop in their earnings, often a very substantial one. Only a handful of the men who left Vane Tempest have found better paid work outside the mining industry. But more than 90 per cent. of former miners are worse off. The picture is not therefore a rosy one for the local economy around Vane Tempest.
A "substantial drop" in wages means a drop of between £50 and £75 a week. That alone is having dire consequences on local trade, shopping centres and shops not just in Seaham, the location of Vane Tempest, but throughout the Easington area.
To regenerate the economy we must quickly get to grips with disposing and reclaiming the hundreds of acres attached to redundant colliery sites. Some 263,000 tonnes of coal have been stocked on a site in Easington. They are surrounded by several hundred former colliery houses that are in a deplorable condition. The miners were prepared to live with coal heaps on their doorsteps so long as the mine was providing work and reasonable wages to allow them to live a reasonable existence. Now, however, the mines have gone but the coal stocks and deplorable colliery housing are still there. Unless we are prepared to tackle the problem of decaying housing, coal heaps and a decaying local economy, I fail to see how we can attract investment into the area.
The area has many qualities. We have a fine, skilled work force, who may require retraining to prepare for modern industry. We have good means of communication, such as the east-coast railway, a dual carriageway and international airports to the north and south of my constituency. But unless we are prepared to tackle decay from within, I doubt whether we shall attract investment.
I question the value of jobs that are coming into the area. For example, the terms of engagement for temporary workers—packers with a minimum pay of £1 an hour—employed by ABC Contract Services Ltd of 5, Great Queen Street, London, which has a plant in Newcastle and is now acting as a third party providing labour for modern industrial units in Peterlee, say:
Unless specifically agreed to the contrary, The Temporary Worker is not entitled to payment from the Employment Business or its clients for time not spent on Assignment whether in respect of holidays, illness or absence for any other reason.
In 1994, those are the terms and conditions for workers in sophisticated industries located in Peterlee. Former mine workers, who have given a lifetime's work to the industry and the country, must expect a minimum wage of £1 an hour. Conservative Members cannot manage on £31,000 a year with a clutch of directorships thrown into the bargain and react vehemently against Labour Members who want a minimum wage of £4.05. We now have an example of a minimum wage of £1 an hour, and it is not unique. We must consider the morale of a work force that has always had the dignity of real jobs earning real wages in a real industry. That matter must be dealt with if we are to have a buoyant economy in the north-east.
I recently read a report in the press, which may have been leaked by Ministers, that the Government intend to examine the old workmen's compensation legislation of 1948. I shall read a letter from a gentleman who, in 1946, when he was 14 years old, lost a leg at Vane Tempest colliery. It says:
My … colleagues took a pithead collection and raised six pound five shillings and sevenpence"—
there were no large sums before the workmen's compensation legislation.
I never at any time received a lump sum from the coal owners or British Coal insurance. You may recall (or have been told) men would lose life and limb and receive nothing prior to the National Insurance Act … I make no claim to a lump sum nor do I wish to do so. I have no axe to grind but never the less I do feel that the `Old cases workmens compensation' are a forgotten cause.
He is not alone in being a forgotten cause: 5,000 people in the Easington constituency are dealing with Peterlee and Seaham officers in relation to workmen's compensation. I am sure that the figure can be multiplied many times over throughout the country.
If the Minister wants a buoyant, mobile, motivated, skilled work force, the correct ingredients must be present to enable them to respond positively. Ministers should not seriously contemplate removing any aspect of the workmen's compensation legislation. The ordinary operative will find it beyond his means to prosecute a case in a civil court. I therefore ask Ministers to consider that very carefully.
In conclusion, I have enjoyed making a brief contribution to the debate on the Loyal Address—perhaps not very gracious to the people whom I represent—but perhaps I shall have another bite of the cherry when the Chancellor presents his Budget next week.

Mr. Anthony Steen: Having witnessed the amazing footwork of the Chancellor and enjoyed the tour de force of the former Prime Minister, my right hon. Friend the Member for Old Bexley and Sidcup (Sir E.

Heath), it is embarrassing to have to make a speech, but I shall not sit down. I shall make one or two observations about the Loyal Address.
The Loyal Address makes it clear that the Government believe that the economy is strengthened by privatisation and that they want to increase competition. I was confused, therefore, about why they confined competition and privatisation to the gas industry, rather than finishing the job in the aviation industry.
There are three legs to the aviation industry—airlines, airports and airspace. The Government privatised British Airways and got the best out of it, after which they privatised the airports and got the best out of them. They failed to privatise the Navigation Air Traffic Control Service to obtain the best from airspace management. NATS has a turnover of £500,000 million a year, employs 5,500 people and has spent £350 million on its new traffic control centre in Hampshire.
Although NATS was not ready for privatisation in the 1980s, when it had out-of-date organisation and was riddled with restrictive practices, today, thanks to the charismatic chairmanship of Christopher Chattaway and its director general, it is ready to benefit from the involvement of the private sector. We shall be able to give more incentives to staff, achieve better productivity from them and manage airspace more efficiently to absorb the capacity that will inevitably increase as new terminals are built.
Too often, nationalised industries become a haven for mediocre management who are protected from the disciplines of the marketplace, whereas in the private sector the ethos is one of achievement. If shareholders are not happy, the management goes. By delaying the privatisation of NATS, which is not mentioned in the Gracious Speech, the Government are holding back the full potential of our airline industry, which is one of the most successful in Europe. By keeping one facet in the public sector, they will reduce available airspace and, as a result, slow opportunities for expansion.
The crucial lubricant for the airline industry is the privatisation of NATS. In turn, money for additional investment will not be forthcoming because NATS is still in the public sector and is confined by Treasury rules on the public sector borrowing requirement.
You may ask, Mr. Deputy Speaker, about the relevance of that to the country. It has serious economic consequences. Heathrow is the hub airport of the world; the importance of allowing it to develop and expand is all too evident. However, because of our tortuous planning processes, the fifth terminal will not be on stream for a decade or more to handle the ever-growing traffic, which instead will be diverted to Schipol in Holland or Charles de Gaulle in France. Holland and France have recognised the significance of airports to economic regeneration, because airports attract not simply more tourists but highly important imports and exports of cargo. No wonder France and Holland have special arrangements for planning inquiries and funding arrangements for airports.
Britain will maintain its share of international air transport only by ensuring that minority pressure groups, who often have little interest in the economic regeneration of an area or the nation, are not given too much influence to them to disrupt and delay the planning process.


Although environmental damage and noise nuisance are important, they should not be allowed to become buzz words for extended delay and procrastination.
I think that we all accept that there is a physical limit to the size of airports such as Heathrow. No one wants to build a third runway in Harlington or Staines but, in exchange for a commitment not to go beyond the present boundaries, the planning process must be relaxed so that new terminals can be built faster and use can be made of the increasing number of slots and movements that new technology will make possible. Let us not forget that the airlines have already made great investments in quieter aeroplanes, but, just as railway stations are noisy places and living near motorways is not peaceful, we must accept some noise footprint around the perimeter fences of airports. Often, people who buy homes near airports work at them too.
Why are the Government, who are committed to competition, committed to privatisation and committed to freeing up the market, not privatising the public utility, NATS?
I have identified three culprits. First, no doubt British Airways had something to do with it. It has done a complete U-turn from backing the idea to absolute disapproval, probably because it foresees new slots arising from deregulation reducing its dominance and increasing the competition. No doubt it is especially mindful that, on routes where British Midland Airways has a foothold and has competed, prices have tumbled by as much as 25 per cent. I must declare an interest as I have been involved in British Midland for the past 12 years.
Routes from Glasgow, Edinburgh and London are among the cheapest air miles in the world. We all know that, where there is competition, prices come down; where there is no competition other than from other state European airlines, one will find that fares remain unnecessarily and uncomfortably high. Competition reduces air fares. By not privatising NATS, air fares are kept up because independent airlines cannot get the slots to compete with the main carriers.
In addition to British Airways not wanting to loosen the slots, the air vice marshals are opposed.

Dr. John Marek: Will the hon. Gentleman give way?

Mr. Steen: I shall give way in a minute.
The air vice marshals of the Royal Air Force are involved in the management of NATS. They say that the Royal Air Force should not be prejudiced as its slots would be at risk. The RAF has 5 per cent. of this country's airspace. Surely some arrangements could be found to accommodate the air marshals.
Finally, a chorus of voices uses the deregulation buzzword "safety" and believes that things are safe only when they are in the public sector. British Airways is a privatised airline that is very safe and has a good track record. Those responsible for safety at airports are even more vigilant following privatisation. The fact that something is privatised does not mean that it is less safe.
We all know the benefits to this country's economy of privatisation and competition. We all know how consumers have benefited. The Government need to free the third leg of the aviation tripos and allow the airline industry to be liberated.

Mr. Jim Cunningham: I was interested in the remarks of the hon. Member for South Hams (Mr. Steen). I do not know whether he has lived near an airport, but there is an airport in my constituency. One of the biggest problems with all airports is noise. The hon. Gentleman did not touch on that subject.
I also understand that the Secretary of State for Transport has promised to introduce legislation that could go a long way towards controlling noise. I should be interested to know when he will stop procrastinating and bring the legislation before the House so that we can debate it. The control of airport noise does not necessarily mean threatening competition. The bulk of the noise comes from old piston engine aircraft. The hon. Member for South Hams should take a good look at airports before he says that we should let private enterprise rip and should not worry about anyone who is kept awake all night by noise. The Secretary of State has not even provided grants outside London so that people can insulate their homes from aircraft noise. I thought that the hon. Member for South Hams would make an issue of that, but he chose to talk about something else. His fifth problem in relation to airports is the hon. Member for Coventry, South-East—me.
Listening to the Queen's Speech, I wondered whether perhaps, instead of increasing Ministers' salaries, they should be cut. This year's Queen's Speech and many others have been about Ministers taking less and less responsibility for their actions and those taken on their behalf. Today, if I ask a Minister a question about an outside quango, he or she refers me to a quango. The quango has to answer, not the Minister, but the Minister proposed the legislation in the first place—a sorry state of affairs. Perhaps we do not need so many Secretaries of State and Ministers, and could save the taxpayer some money by reducing the number.
I was disappointed that, in his speech, the Chancellor only touched on the general agreement on tariffs and trade and Pacific rim countries. I take GATT seriously, as I do the fact that, as a country, we must be involved in the Pacific rim trading area. We have not received much information from the Government about those two specific subjects.
In relation to those two issues, I am concerned that it is not clear how the American Senate and Congress will react. There have been many signals about GATT and the Pacific rim agreements from the Republicans and it seems that they may well start to hold up the agreements. One must wonder exactly what that would mean for Britain's trading position in those areas. It is vital for the Government to give us more answers to the questions on that subject and to monitor the position closely.
Another element of the Queen's Speech that gave me cause for concern was the hint that public expenditure was to be cut. The Government may think that that is wonderful, but I do not. Will local government once again be used as whipping boy? Will the Government knock local government about? They can certainly cut local government expenditure by deducting grants to it. If the


Government do that this year, more and more services will be affected. I have no doubt that the Government will say that they have not yet prepared the Budget, so we shall have to wait and see what happens when it is announced.
Over the years, the Government have subtly cut local government expenditure. They have cut about £300 million, one way or another, from Coventry city council over the past 15 or 16 years. There was not much on that subject in the Queen's Speech—only a small hint of what might happen. When we try to push for more information, we are told that we had better wait until the Budget, when all will be revealed. That will be interesting.
Last Monday, colleagues and I presented a petition with a quarter of a million signatures to No. 10 Downing street. Many people from the Coventry region signed that petition, which referred to the public's revulsion at increases in VAT on fuel. I am sure that if Conservative Members have taken soundings in their constituency associations or surgeries, they will know that the public want the second phase of VAT dropped, as they did the first.
Over the weekend, Conservative Members were saying in the press that the Government's financial objectives had been achieved and they should perhaps consider dropping the second phase of VAT. I hope that those Conservative Members will use their influence with the Chancellor to persuade him to drop the second phase. There is no justification for it—the Chancellor keeps saying how well he is doing in balancing the budget and how wonderfully the economy is doing under his stewardship.
My city has a major industrial base, which has been eroded. Coventry has two large aircraft factories—in fact, it has one and a half, as one has been run down. When I talk to people involved in the aircraft industry, it becomes clear that their concern is that money and Government assistance for research and development are not forthcoming. We do not need to talk about the aircraft industry alone but can consider the broad spectrum of British manufacturing, including the car and electronics industries and other technologies. One of the biggest cost factors, apart from labour, is research and development. I was disappointed that that subject was not mentioned.
It is interesting that the richest people in our country pay only 8 per cent. of total VAT, whereas the poorest pay about 20 per cent. So the rich do very well and are well protected and, once again, the poor are penalised.
I am sure that many hon. Members would agree that pensioners who have taken out private pension schemes—there are about 6 million pensioners—have every right to be worried. The proposals at which the Government have been hinting notwithstanding, pensioners are still concerned about the lack of accountability for such schemes, which have not delivered what was promised in the late 1980s when these people left the state earnings-related pension scheme to join private pension schemes. There have been too many scandals and it is about time the Government did something to end them.
I note that the Government have been using underhand methods when it comes to the so-called assistance for poorer families and pensioners who have to pay the increased VAT. That help is taken into account in DSS calculations of their grant eligibility. In that way, the Government give with one hand and take away with the other.
When hon. Members supported the legislation that set up the Child Support Agency, they intended to go after absent parents who never paid a penny for their children. I shall not rehearse the arguments against the CSA tonight. Suffice it to say that all the fears that were expressed about it have now come home to roost. The Government publish figures to show how successful the agency is, but once again it is the innocent people who honoured their court commitments to their families who have discovered that they will be the ones to be penalised.
As a matter of urgency, the Government's proposals to change the operation and formulae of the CSA should be brought to the House, and parliamentary time must be found to debate the issue. It is no good condoning press leaks stating that the Cabinet have been discussing this or that idea for the CSA. Why do not the Government show a little heart and introduce legislation as soon as possible to stop the misery that they are inflicting on first and second families alike?
The Queen's Speech also failed to mention the problem of homelessness and how to deal with it. The Government seem to be hinting that they will do something to control drugs, but many young people in Coventry in shelters such as Norton house, run by the Cyrenians, now rely on charities to raise large subscriptions because the Government have steadily reduced their grants in recent years. While the problem has multiplied, grants to deal with it have been reduced.
I have only skimmed over the surface of some of the omissions from the Queen's Speech. The Government may claim to want a steady ship and no more controversy: "Let's see how the economy develops." That may be the Government's view, but while they await events, events may overtake them. They must realise that, by their inaction and failure to put matters right, they are inflicting more and more hardship on the most vulnerable people. They must reconsider their so-called steady course and introduce some humanitarian legislation, just for a change, based not on greed but on human need.

Sir Ivan Lawrence: I do not want to enter into a lengthy argument with the hon. Member for Coventry, South-East (Mr. Cunningham) because I have the honour of serving with him on the Home Affairs Select Committee. Politically speaking, he is decidedly an improvement on his predecessor. I should point out, though, that the VAT compensation scheme does protect pensioners and poorer households, to the extent of £2.5 billion. Added to that are other benefits, such as cold weather payments and energy efficiency schemes, to say nothing of granny bonds, and so on; thus are the Government protecting people who would otherwise have to pay more VAT on fuel.
I should have liked to tell the hon. Member for.Easington.(Mr.Cummings)—he is not here now—that, much as I was moved by his speech, I hope that he will not mind my observing that if the president of his union, the National Union of Mineworkers, had not led the miners into a long and crippling strike, demand for coal


would not have transferred to gas and the six collieries around Easington about which he was worried might still be open today.

Mr. Etherington: rose—

Sir Ivan Lawrence: I was directing my observation to the hon. Member for Easington. If the hon. Gentleman would like to intervene on another topic later, I shall certainly take his intervention.
I came into the Chamber because there were rumours of a rare sighting of the hon. Member for Dunfermline, East (Mr. Brown) in the Lobby. I hurried in to hear so great an intellectual expounding his post-neoclassical symbiotic relationship endogenous growth theory. I was sadly disappointed. Apparently, his speech about Labour's economic policy and Labour's pledges is to be made outside the House. It is perhaps not too cynical of me to suppose that the reason for that is known as Brown's law, which the hon. Gentleman expounded for the first time on the "Today" programme 10 months ago. When challenged about an absurd pledge, he answered:
Unless you can quote me chapter and verse about commitments made in the House of Commons, then they were not made.
So we shall no doubt hear all sorts of commitments in tomorrow's economic speech, but they were actually not made because the hon. Gentleman did not make them in the House.
I hope that the Chair will allow me to deal with that part of the Gracious Speech which declares:
My Government will play an active part in tackling drug misuse, drug trafficking and organised crime at home and abroad.
Drugs and organised crime have become so serious in some countries that they pose a threat to economic stability as well as to democracy and political stability.
Most people in Britain today are rightly worried about law and order and are finding it a little difficult to accept the truth: we are at last beginning to reduce crime. I think it particularly alarming that most people who feel so strongly about crime do not have the faintest idea of the extent or potential of the organised crime that is coming to us across national boundaries. As George Staples, head of the Serious Fraud Office, told an international symposium on organised crime held in Cambridge in September, three of the fraud cases in his office at the moment exceed by several hundred million pounds each the entire proceeds of burglary in England and Wales in one year.
Most fraud is simply never investigated and its perpetrators are never caught, let alone brought to trial and convicted. Millions of pounds can be moved out of one country's jurisdiction to another's in the twinkling of an eye along the electronic highway, without any police force being aware of how, where, why or when it happened—until long after anything can be done about it. Many international banks have investigators running around like headless chickens, yet they are keeping quiet about what is happening lest confidence in those banks be diminished. It is clear, therefore, that we face a very serious problem.
It is not just the computer and modern technology that are to blame. International barriers have broken down in other ways. There is easy international travel, burgeoning international trade, and the disintegration of the

communist-centred world. That results in vulnerable, confused systems in small new countries which seek a fast track to economic success, stability and recognition. There is a growth in gangs which exploit the vulnerability of confused systems in which there has been a breakdown of law and order. We do not know how many of the 2,000 banks which, I am told, have been set up in Russia are properly supervised and controlled.
We can add to that the spread of the drugs culture which, through money laundering, is responsible for much international economic crime. It is almost impossible to be too cataclysmic in one's assessment of the potential for international crime.
Massive drug addiction is causing terrible human suffering, but we must also consider the financial aspect of such a drug culture. In Bolivia, the total profit from the illicit sale of 56,000 tonnes of coca products is $750 million a year. Peru produces 60 to 75 per cent. of the world's entire supply of cocaine, which yields $1,000 million a year. Colombia, the world's main processor of cocaine, yields profits of $300 million. In those countries, most of the total exports and gross domestic product are drug related. A third of the best agricultural land is owned by drug barons, who have private armies, form their own political parties and use terror gangs to intimidate politicians, security forces and judges, and operate by bribery and murder.
By the time the drugs are processed and distributed, the world value of the cocaine trade alone is put at several hundred thousand million US dollars. That is as much as the entire gross national product of countries as big as the United Kingdom. With that money, land is bought and developed, factories are bought or constructed and businesses, including banks, are set up to process and launder the money. It is invested in legitimate businesses where it grows to become a significant part of national economies.
I have not so far mentioned the organised crime in the countries of transit such as Argentina, Brazil, Chile, Ecuador, Paraguay and Venezuela where processing takes place and drug consumption grows and destroys young lives. I have not mentioned the United States, where 5 million people use cocaine and crack, or the Caribbean. Some 80 per cent. of the heroin seized in Britain comes from south-east Asia—the golden triangle of Burma, Laos and Thailand, or from the golden crescent of Afghanistan, Pakistan and Iran.
There are millions of opium and heroin addicts. There are 2 million heroin and 1 million opium addicts in India. Pakistan has 1 million heroin addicts and there are 2 million in Iran. Other centres are in China and Hong Kong. Then there is the herbal cannabis of west Africa and Jamaica and the cannabis resin of Lebanon and Morocco. Millions of addicts and billions of dollars are being created by drug trafficking operators who are looking for financial systems to infiltrate, Governments to buy and economies to undermine.
It has been authoritatively estimated that at least five countries are known to be under the control of their crime syndicates, and that others in eastern Europe and elsewhere are becoming sitting targets for future attack. Some of that activity is bound to come our way. Already, we are told that 50 to 60 per cent. of all crime in the United Kingdom is drug related. Some people even want to legalise cannabis, and that would lead to more young people getting the drug habit. As Governments control


supply and demand rises, even more gangsters will reap the rewards of drug trafficking. It is a relief to us all that the Government have set their face against any move to legalise drugs.
Although drugs are certainly the largest field of activity of organised crime in the United Kingdom, there are many others: the dealing in and supplying of firearms, the theft of cars and lorries, the smuggling of illegal immigrants, forgery and counterfeiting of currency, the pirating of goods, the theft and disposal of works of art, illegal gambling, prostitution, extortion, blackmail, protection rackets, benefit fraud, computer fraud, credit card fraud, fraud against the European Union budget, bootlegging, tax evasion and violence in support of those activities and terrorism. Whatever else we know of those crimes in Britain, we know that by their very nature they will be substantially under-reported.
The Select Committee on Home Affairs is looking into organised crime, and public evidence to the Committee has shown that the nature of organised crime in the United Kingdom has changed. There is no longer a British "Mr. Big"; nor are there large gangs of domestic organised criminals. Now our gangsters are the tentacles of international organisations.
Much of the United Kingdom's serious crime is based on overseas cultural or ethnic groups such as the mafia and the Jamaican and Caribbean yardies who distribute drugs, employ violence and set themselves up as role models for the young. The Chinese and Vietnamese triads are involved in drugs, fraud, extortion and intimidation. There are the Colombians, and I have been told that there are about 40,000 illegal Colombian immigrants in Britain, most of whom are connected in some way with the drugs trade. There are Japanese, Turkish and Kurdish gangs and middle east terror gangs. Only last week the Jewish community was warned by the police to take extra care, even though a middle east peace settlement is in the making.
Now there are eastern European gangs. The national criminal intelligence service told the Home Affairs Committee that up to 40 per cent. of Russia's GDP may be controlled by organised crime. Mr. Giacomelli, the director of the United Nations drugs commission, told us that law was breaking down in Russia and that countries around it were threatened. That has spread to Germany, and we were told that there are already about 200 money laundering cases with Russian connections. An estate agent has said that a significant number of houses and prime sites in London are bought using Russian money. Much of that international activity is facilitated by our still tolerant immigration laws and, of course, by the 20,000 to 40,000 refugee asylum seekers who come to this country every year or who seek asylum when their studentship expires.
How are we to control crime? We educate, or we should, those who are most susceptible to infiltration or attack. It was heartening to see in today's issue of The Daily Telegraph. fan article about an education committee that invited an ex-junkie to tell sixth formers about the terrifying consequences of taking drugs. We can prevent crime by stimulating awareness, vigilance and close monitoring. We must develop our means of gaining intelligence about drug activities through international co-operation and perhaps by changing the law to allow greater access to tax records.
We target organisations and individuals who are known to be at criminal work. We bring offenders to trial where there is sufficient evidence, convict them, if we are lucky, and deprive them of their assets. We should impose deterrent sentences as well, because depriving such people of their assets is not enough to deter them. They will just try again.
During all that, we co-operate with all the internattonal agencies using all the international conventions—with the United Nations drugs control programme, the G7 financial action task force, the chemical action task force and the European Union ad hoc working group on organised crime. We co-operate with Interpol, Trevi, CELAD, MAG—and with Europol, when it comes about—and with individual countries sharing our problems. All that is good, necessary and likely to prove helpful.
The one blot on the horizon of effective international co-operation and national control, the one positive obstacle to our campaign to control international crime, would seem to most of us here in Britain to be the proposed dismantling of formal border controls in accordance with the Single European Act. That Act, as everyone knows, amends the European Community treaty on measures to establish a internal market.
On the face of it, anyone from a European Union country can come to the United Kingdom without check, bringing goods without check, providing services without check and using capital without check. Anyone who has managed to get into a European Union country from outside Europe and become a citizen can also do those things.
On the face of it, the Single European Act drives a coach and horses through all the necessary preventive controls on potential economic crime coming into Britain. The consequences to us are too horrific to contemplate. Already, we have reduced customs checks on persons and goods travelling between member states and entering the United Kingdom, hence the blue channel at our international ports of entry.
We have to ask whether and to what extent this concession to the aquis communautaire is making crime prevention potentially more difficult for us. In his evidence to the Select Committee, Mr. Neil Dickens, the national co-ordinator of the Regional Crime Squad, thought that it had, and that international criminals from outside the European Union—never mind those within it—had only to enter the European Union at its weakest part to move freely around as they wish.
Of course the Government has retained some important defences and I welcome that. We do not concede that the Single European Act requires any reduction in immigration controls. We argue sensibly that we retain the right to require inspection of the status of all persons entering the country, whether or not they are from another member state. As we have the right to control entry by non-EC nationals, we must be able to see whether they are genuine EC nationals by inspecting them.
We also argue that the qualifying words of article 7a—that the free movement of persons, etcetera, should be in accordance with the provisions of the treaty—mean that the other treaty articles allow us to exclude persons or restrict the export or import of goods where public order, safety or security are threatened.
There is also a general declaration attached to the Single European Act which gives member states the right to take such measures as they consider necessary for the purpose of controlling immigration from third countries, combating terrorism, crime, the traffic in drugs and illicit trading in works of art and antiques. We retain the discretion to apply such measures as we consider appropriate.
Having said all that, it is clear that a majority of our European Union partners take a literal interpretation of article 7a and want nothing less than the complete abolition of internal border controls, although they are prepared to allow some compensating measures. The European Parliament has started formal legal action against the European Commission over its failure to ensure that we dismantle all our border controls, although that case is unlikely to be heard until the latter part of next year, and I understand that we are intervening to put our case.
I am sure that the British Government are quite determined to defend our frontier controls. That is because, unlike the rest of the European Union, we are a island, we do not have continuous borders with other countries and our borders are themselves a control. I hope that the Government will continue to hold out against such intervention in our protection because I am sure that that would be consistent with the wishes of the people whom we represent. That is why we have not signed the Schengen convention. We believe that border controls are more effective than any internal checks, even if we had compulsory identity cards, which we do not. The Government must not weaken in that resolve.
Regardless of the argument about border controls, even closer co-operation, particularly with our European partners under the third pillar of Maastricht, title VI, which the Home Affairs Select Committee monitors, is absolutely vital if we are to continue to contain the international crime wave which otherwise will come to us.
I know only that if the threat of organised international crime is anything like that which I have supposed it to be in the course of my remarks, it is absolutely vital that we do not erode any of our powers to keep out criminals, illegal immigrants, drug traffickers and terrorists and that we ensure that the external frontiers convention, on which we are working with our European Union partners, is an effective weapon to protect our borders.
Our free society is under sustained attack. We must not be defeated by technology or by unacceptable laws that bind us and are imposed on us by others. I, for one, do not accept that crime is the necessary price we pay for a free society and I hope that everyone in the House and the Government agrees.

Mr. Michael Clapham: I am pleased to follow the hon. and learned Member for Burton (Sir I. Lawrence), but I found his opening remarks about the mining industry rather disappointing. If he looks at the historical record, he will see no evidence to support his remarks. However, his overall contribution was interesting.
The Gracious Speech was less ambitious in comparison with previous years; nevertheless, it takes us in the same old economic and social direction. It is an approach that has caused a great deal of suffering for a substantial minority of our citizens and it has severely restricted the manufacturing capacity and competitiveness of British industry.
The warning in the Gracious Speech that there is likely to be a further reduction in the share of national income going to the public sector signals another assault not only on the minimal welfare state, but this time on the workplace. Established working practices are now under attack. Those include the 40-hour week, rising real wages, paid holiday leave and employers' contribution to pension funds.
The assault arises because the Government's analysis of the problem facing the United Kingdom economy is seriously flawed. It is clear that the blame for the United Kingdom's ills is being put at the door of the welfare state and the burden that it places on employers and the state budget. That is patent nonsense. The growing cost of unemployment and the ill health that results from unemployment is a cost that is directly attributable to economic mismanagement over the past 15 years.
The complete surrender to the concept of the unfettered market has released forces that can destabilise entire social systems. We are already experiencing the impact of that negative side in the United Kingdom—growing poverty, high unemployment, increasing crime and drug abuse.
Markets can help direct resources and maximise their use, but if the mitigating influences are dropped, the worst effects can win over the best. By driving down wages and terms and conditions in industry, the Government are unwittingly creating the conditions for the United Kingdom's industrial demise.
The United Kingdom can hope to compete only at the higher-value end of the market; we cannot compete at the lower-value end of the market with the newly industrialised countries. If we are to equip our industries so that they can compete, we need an industrial strategy to ensure that we are keeping our lead in the industries in respect of which we have an advantage. We must also strengthen and encourage the industries in respect of which we are weak. That means more spending, not less, on supply-side factors such as research and development, education and training.
A major problem is that the markets are now global in their character. Bringing the forces that have been released back into a framework will not be easy, but it can be achieved. Many new industrial countries have a competitive advantage precisely because they can exploit their labour markets outrageously by paying poor wages and avoiding spending on social provision.
The way forward is to improve living standards for all, not to worsen them. Therefore, in exchange for the western world keeping its markets open to the new industrial countries, they should be called on to agree and recognise trade unions and collective bargaining as part of a social package of rights for working people. That could be extended to include an environmental code to protect the world against further pollution. Without that, it is inevitable that the world will divide into trading blocks. Protectionism will be inevitable. America's drift down that road can already be detected.
Those were part of the conclusions of the participants in a seminar at the International Labour Organisation headquarters in Geneva a fortnight ago. The participants included the World bank and the International Monetary Fund. Is not it ironic that the one thing that the Conservative party likes to hate most—the social chapter—is a concept that could save European manufacturing industry?
When the Minister replies to the debate, perhaps he will tell us whether he would agree to a social and environmental clause being added to the constitution of the World Trade Organisation. That would create a world trade policeman and the effect would be to increase the quality of life of people in the new industrial countries. It would also protect the environment and stimulate further world growth.
Without those measures to mitigate the worst effects of the market and to create a new global code of world trading practices, it is unlikely that we shall increase permanent jobs in the European Community. However, as the hon. and learned Member for Burton said, we can be sure that we shall experience more of the already creeping economic and social decay.
I want to consider the United Kingdom in relation to jobs. Most of the jobs created between September 1993 and September 1994 were, according to a Trades Union Congress report, white collar, insecure and low paid. The report was based on Department of Employment figures, which showed that 130,000 new temporary jobs had been created, but over the same period 26,000 permanent jobs had been lost. The latest research on pay undertaken by the Library for my hon. Friend the Member for Darlington (Mr. Milburn) reveals that 10 million workers in the United Kingdom are living on earnings that are less than the European Community decency threshold.
Clearly, we need a more positive response from the Government than that which is contained in the Queen's Speech. They must recognise that job security and full employment, to which they claim they are now committed, go hand in hand; and perhaps the Minister can tell us later whether the Government still accept the commitment made by the previous Secretary of State for Employment when he visited the TUC.
The Government must do three things. First, public sector-led investment must be increased. At the moment, investment is 20 per cent. below its peak in 1989 before the recession. It is well below that of our major competitors. Secondly, greater investment in research and development is called for. Again, we spend less on research and development than our major competitors.
Finally, there should be an end to the unfair discrimination against the public sector. In that respect, the Government could make a start by freeing the Post Office from the straitjacket of the external financing limit. That would allow the Post Office to compete on an even footing with other commercialised but publicly owned postal services such as the French, German and Swedish services.
According to what the Post Office management told the Trade and Industry Select Committee, no other successful Post Office in the world has divided its post and parcel services from its counter services, as was proposed by the President of the Board of Trade. The Post Office can remain public and profitable.
We must be clear that the gas Bill proposed in the Queen's Speech is not about creating conditions for cheaper gas prices; it is about making a national private monopoly into a series of smaller monopolies. It is really about sharing out the spoils. That point was made clear by the announcement that gas prices are to rise by 3 per cent. while the management has awarded itself fat increases. That is one of the things which people find obscene about Tory Britain.
It would have made more sense and been more helpful if the Government had declared their intention not to increase VAT on domestic fuel from 8 per cent. to 17.5 per cent. in 1995 and if they had announced a planned extension of the gas transportation network to rural areas of the UK, to end the existing situation of haves and have-nots.
My constituency is partly rural and many of my villages, such as Stainborough, Wortley, Greenmoor, Crow Edge and Dunford Bridge, have no natural gas supply. That must also be the case in many other rural constituencies. Many of my constituents must pay 30 per cent. more for liquefied gas than users of natural gas, or they must buy more expensive smokeless fuel. The inclusion of VAT means that they are paying more tax per unit of energy used than people on natural gas. That inequality in the access to domestic energy should not be tolerated in a modern industrial society. When the Minister replies, I hope that he can tell us whether there are plans afoot to deal with that situation of haves and have-nots in respect of people living in urban areas as opposed to those in rural areas.
In the energy economy, large amounts of gas are now being burnt to generate electricity. According to The Financial Times Coal UK there is currently 7,380 MW on stream and another 6,380 MW under construction. Another 3,300 MW are planned before 1995. That capacity, together with the 6,500 MW that have been given section 36 approval, means that by 1999–2000, we shall be burning the gas equivalent of 55 million tonnes of coal. That is an inefficient way of using gas. I do not believe that any hon. Member believes that we can continue to use it at that rate without it impacting on prices and, ultimately, on British competitiveness.
At the same time, a great amount of coal has been locked into the ground by colliery closures. As my hon. Friend the Member for Easington (Mr. Cummings) said, mining communities continue to suffer from the effects of the unwarranted colliery closure programme. When referring on Monday to unemployment rates in mining communities, the President of the Board of Trade used the travel-to-work statistics. He should have considered a recent report, which shows that male unemployment in some mining villages is as high as 60 per cent. That occurs because mining is generally a rural occupation and unemployment tends to be in pockets.
Villages such as Woolley in my constituency seem to have been forgotten since the colliery was shut. The community hall has closed down, and so have the school and the last shop. The causeway that links the village with Darton and crosses British Coal property needs resurfacing, and the derelict land that British Coal owns around the village needs cleaning up.
Dust from substantial coal stocks still on the stocking ground is a nuisance. Life for the mainly elderly residents worsens day by day. My representations to British Coal and to the Minister for Energy and Industry and requests


for assistance have met rebuffs. The regeneration package of £200 million for areas affected by pit closures was clearly insufficient, and more needs to be made available. The Government have failed miners and mining communities.
Another regrettable omission from the Gracious Speech was a proposal to replace the outrageous regulation that currently prescribes chronic bronchitis and emphysema as industrial diseases in relation to deep coal mining. Of the 43,827 claims received by September 1994, there have been only 4,469 awards. Some 13,995 cases were rejected on X-ray evidence, and another 18,658 failed the so-called forced expiration value test—the FEV 1 test. That is a disgrace and it needs to be dealt with immediately. I hope that the Minister will impress on his right hon. Friend the Secretary of State for Social Security the need to tackle that outrageous regulation.
Even if a miner is diagnosed as suffering from that terrible debilitating disease, he cannot claim compensation from British Coal's pneumoconiosis scheme. That is despite the fact that, in order to succeed with a disablement assessment, he must show X-ray evidence of simple pneumoconiosis. The Minister for Energy and Industry will not widen the scope of the current scheme. No doubt the Treasury has a hand in that, fearing that the effects of such a move might influence the attitude of would-be buyers into the coal-mining industry. That is a disgraceful decision. It means that men who have made an enormous contribution to the United Kingdom economy, most of whom are elderly, have now to prepare for long, drawn-out court battles to try to win compensation.at a time of life when they could do without such worries.
The Gracious Speech offers the people only more of the same, and they have had a bellyful. It exposes a Government who have run out of ideas and a Government who have no vision. The sooner they make way for a Labour Administration, the better will be the fortunes of the British people.

Mr. Edward Garnier: I am grateful for this opportunity to deal briefly with the amendment in the name of the right hon. Member for Sedgefield (Mr. Blair).
Opposition Members ask us to
regret that the Gracious Speech excludes positive measures to remove the fear of unemployment".
It goes on to suggest that we
tackle the unacceptable and clumsy reforms of the NHS and to cease treating education as a business rather than a service".
I wish to demonstrate that that premise is false, and why that is so, especially in respect of education and unemployment.
One has only to look at page 3 of the Gracious Speech to see that the Government intend to deal with unemployment in very straightforward terms. The Gracious Speech states:
My Government will continue to promote enterprise, to improve the working of the labour market, and to strengthen the supply performance of the economy. They will bring forward legislation to promote increased competition in the gas industry and to reform the agricultural tenancy laws in England and Wales. A Bill will be introduced to create a Jobseeker's Allowance, reforming benefits for unemployed people and giving them better help into work.

If that does not deal with those issues straight on, I do not know what does.
People in my constituency, which is both rural and urban, will be delighted to see reform of the agricultural tenancy laws as it will stop the leakage of people away from farms and will open farms to increased tenant farming. At present, landlords and farmers who are keeping their own land in hand are inhibited from providing land for tenants because they consider that the tenant and his successors will, in effect, be able to hold on to the land in perpetuity. The new tenancy laws and the more businesslike arrangements to be introduced in the agricultural tenancy Bill will provide greater flexibility and therefore better chances for young people, which had previously been denied them.
The employment picture in my constituency is extremely good. The Library figures for the past few years show that unemployment has gone down consistently and at a pretty good rate since July 1986. Unemployment in my constituency—which, as I have said, covers rural and urban areas and about a quarter of the area of Leicestershire—was 2,524 in July 1986. By October 1993, it had fallen to 2,070, and in October 1994 it was 1,863. There have been decreases of 26.2 per cent. since July 1986 and 12.1 per cent. from September to October this year. That evidence demonstrates inaccuracy of the implications of the amendment.
Harborough has the lowest unemployment in the midlands and the 10th lowest unemployment in England. I venture to suggest that my constituency is not much different from many others represented by Conservative, Labour and Liberal Democrat Members. We have lower unemployment because business men and women do not allow themselves to be interfered with by local or national Government unless it is strictly necessary.
My local authority works hand in hand with the business community. Indeed, Harborough district council recently produced an admirable brochure advertising the good sense of doing business in Harborough. The cover states that Harborough is
the right place for your business".
The figures demonstrate that Harborough is the right place to do business. The brochure proudly points out that
The area is renowned for its engineering, shoe, hosiery and graphics sectors. Nevertheless the industrial base is very broad indeed. Market Harborough accommodates the head offices of HP Foods and Golden Wonder as well as manufacturing industry such as Tungstone Batteries, Crosby Valves and Harboro Rubber.
The area is rapidly becoming the `hub' location for many major UK concerns … There are approximately half a million working people within the 'travel to work' area around the district, a great recruitment advantage.
There are good schools and good universities in Leicester. I refer to Leicester university and De Montfort university at Loughborough, which is just outside my constituency. All those factors persuade business people at home and abroad to set up business in Harborough and thus to provide employment in the east midlands. Those figures and facts demonstrate to the Henley centre for forecasting that Harborough is one of the top 25 local authority areas in respect of future economic prospects. If local authorities in other parts of the country, including those saddled with Labour and Labour-Liberal Democrat authorities, would follow the policies of the Government and of Harborough district council, things would be a lot better in those areas as well. The Labour party wants to


introduce the social chapter and the minimum wage, and increase Government intervention, all of which would be deleterious to the economic strength of my constituency and others like it.
Business men in my constituency tell me that their order books are filling up in both the long and the short term. Only a couple of years ago, they wondered whether they would have any work to do in six months' time, or even in one month; now they are crying out for additional labour. The local papers are full of job vacancies, and businesses are finding it difficult to fill those vacancies with people of the right calibre and with the right skills. My constituents are beginning to reinvest their profits in their businesses.
As I have said, the local picture looks extremely good and is likely to improve further. That picture, however, is not confined to my area; it is replicated throughout the country, as people would discover if they could be bothered to look. We are now enjoying vigorous, sustainable export-led economic growth as a result of effective, comprehensive Government economic policy.
In the third quarter of 1994, British gross domestic product increased by 4.2 per cent. year on year—faster, I believe, than was predicted even by independent City analysts. Manufacturing output rose by 5 per cent. in the three months to September 1994 against the same period last year, and over that time industrial output rose by 5.9 per cent. In October 1994, retail sales were 3.1 per cent. up on the previous year; in the third quarter of this year, company profits rose by 5.6 per cent.—up 18 per cent. on last year. Both the IMF and the OECD expect Britain to be the fastest growing of the major European Union countries, and at least equal with France in 1985.
Where in that evidence is the basis for the amendment tabled by the Leader of the Opposition? It does not exist. Let us examine the national employment figures, which reflect those in my constituency. Unemployment fell by 45,000 in October, and has fallen by 450,000 since December 1992. The stock of vacancies at job centres has risen for 12 consecutive months, with well over 200,000 new vacancies being notified every month and probably twice as many available from other sources. That reflects the good news in my region.
We are also seeing the benefits of low inflation. Inflation is firmly under control, with underlying inflation remaining at 2 per cent. in October for the second month running. If that is not good news, I do not know what is. Interest rates, at 5.75 per cent., are at their lowest since the 1970s, and their reduction from 15 per cent. in December 1992 means £13.75 billion a year off industry's annual interest rate bill. That is just what my local business men want, and what business men want throughout the country. The reduction also takes £150 off monthly payments on the average £33,000 mortgage. That is what my home-owning constituents want, along with those who hope to own a home. I trust that the Opposition will come to realise that, no matter how dismal the picture that they want to see, the facts tell a different story.
On top of that—

Mr. Richard Shepherd: Unit wage costs?

Mr. Garnier: I am glad that my hon. Friend is following my remarks; like me, he represents a manufacturing constituency.

Mr. Shepherd: I also have the same brief.

Mr. Garnier: We are singing from the same song sheet for once, and there is no harm in that. We must not keep these matters to ourselves: we must let the world know that the Government are doing a superb job, and that our party is leading the economic revival in this country arid, indeed, in Europe. I look forward to a strong and helpful Budget from my right hon. and learned Friend the Chancellor on 29 November, which will continue that trend.
The picture that I am painting, both locally and nationally, is of sustainable improvement. The Leader of the Opposition and his colleagues, however, not only complain about the dismal unemployment picture—looking, as they do, through the wrong end of the telescope—but complain that we treat education
as a business rather than a service".
On the contrary, the three grant-maintained schools in my constituency are leading the way in education. Moreover, they are not in the leafy suburbs of Leicester, such as Oadby, or the well-off parts of my constituency such as Market Harborough; nor are they in the rural villages. They are in the poorest parts of the constituency, in Wigston and south Wigston, where the so-called working class that the Labour party wishes to keep in poverty are crying out for the schools to change from state-dominated high schools to schools that they can run themselves. Indeed, they have elected to allow their own governors to run them for the benefit of their children.
I visited South Wigston high school yet again last week. It has recently installed a new workshop containing computer-aided manufacturing and computer-assisted design equipment, which is providing children aged between 10 and 14 with the latest technology—technology that is not only interesting for them to see and use, but highly relevant to the needs of the local economy and to their own needs as future employees in science, technology, engineering or manufacturing. That would not have been possible under local authority domination, but it is possible now that the school has been freed from that yoke and become grant maintained.
Opposition Members often say that the grant-maintained system is no more than a massive bribe to encourage perfectly good local education authority-run schools to move into the independent sector, and that once the so-called bribe money has run out the schools vial be in trouble. South Wigston high school has been grant maintained for some time; not only has it kept up its teacher numbers, but a long queue of parents are waiting to send their children to it. It has seen its neighbouring LEA schools having to cut teacher numbers and make other cuts, not because the Government have starved the education system of money but because the LEA is incompetent and cannot manage its affairs sensibly.
The Opposition amendment complains that the Government should
cease treating education as a business rather than a service".


My constituents send their children to a grant-maintained school precisely because they are fed up with the way in which the LEA fails to provide a service because it is not conducting its affairs in a business-like way. There is nothing wrong with a state-funded business providing a service if it does so sensibly, but that LEA has gaily lost £6 million in the past year without even knowing where it has gone. The director of education has had to take early retirement owing to ill health.

Mr. Clappison: Does my hon. Friend's constituency resemble mine, in Hertfordshire, where many children in low-income families are choosing to enjoy the benefits of an independent education through the assisted places scheme? Will his constituents, like mine, wonder how the abolition of that scheme would enable them to receive a service, as the Opposition would have it? How would they feel if they were told that they could not have the opportunity to choose for their children?

Mr. Garnier: As always, my hon. Friend makes his point eloquently and forcefully. I cannot add usefully to what he has said, but he has backed up my argument and destroyed the argument that apparently underpins the amendment.
I have taken enough of the House's time to make the few points that I wanted to make about unemployment and education—

Sir Ivan Lawrence: Why not go on?

Mr. Garnier: I could go on much longer, but I must allow others to speak.
I trust that Conservative Members will demonstrate with renewed vigour that the Government's policies on employment and education are succeeding, and that the Opposition's ideas—such as they are—are vacuous and devoid of content. Nothing that we heard from the hon. Member for Dunfermline, East (Mr. Brown) suggested that he had applied his mind to anything of an economic nature this afternoon, let alone during the time in which he has held the post of shadow Chancellor. I trust that he will continue to hold that post for many years.

Mr. Bill Etherington: I am pleased to be called in the debate. I was unlucky in the debate on Monday, which was my first choice. I was offered only five minutes, so I thought that it might be better to try again and I am grateful that I have been successful.
I start by mentioning the several measures that I welcome. I welcome the proposal to set up an independent criminal cases review authority. That is long overdue. It has been obvious for many years that there is a gap in the criminal justice system, which as a result has failed to address the problems of fairly obvious miscarriages of justice such as the cases of the Guildford Four and the Birmingham Six, among others.
That measure is timely, coming as it does when we are threatened with the implications of reduced legal aid, which is a potential minefield for further injustice if people decide that they cannot afford legal advice and try to do things themselves.
I am pleased that, as befits a body of this nature, the review authority will be free of the courts and the Government. I look forward with interest to the debate on this measure when it comes before the House, and I hope that it will also be free of any influence from the police. I do not say that as an anti-police or a pro-police speaker, but one must recognise that many of the famous cases of injustice in recent years have involved the police either failing to disclose evidence to the defence or, on occasion, tampering with evidence.
There has been maladministration within the police force, and it is incumbent on the Government to ensure that the review authority has its own investigative body which is independent of the police. If they cannot go that far, they should at least say that when there is any question of police probity in a case of an alleged miscarriage of justice, some independent system will be introduced.
I am also pleased to see that powers are to be introduced to curb dangerous mental patients. That issue has caused great public concern at a time when society is grappling with the Government's policy on care in the community which has replaced institutions and, on occasion, hospital places. The problem of dangerous mental patients has been exacerbated by the failures of the care in the community programme.
I sincerely hope that there will be some improvements. Care in the community is an excellent concept, but if it is not properly administrated—to date it has not been—or properly resourced, I fear that it will become debased and that the public will lose confidence in the concept, which would be a tragedy.
There is a proposal to abolish the regional health authorities. I do not feel strongly one way or the other on that, because I have had little to do with them. However, if the Government intend to abolish local health authorities and, in particular, the Sunderland health authority, I will welcome that with open arms.
I also welcome the monitoring of national health service trusts. That is not being done effectively at the moment through the purchaser-provider system. I give an example of something that has caused me great concern, which I am pleased to bring to the attention of the House.
Recently, a number of people in my constituency were collecting signatures on petitions against the Sunderland health authority's proposal to get rid of 400 hospital beds. During their endeavours, I saw four people who worked for the two hospital trusts, Priority Healthcare Wearside NHS Trust and City Hospitals Sunderland NHS Trust—the names are nearly always a mouthful; more words than deeds, in many respects—saying that they would like to sign the petition but they did not dare do so because there , could be repercussions and recriminations with their employers. That is scandalous.
Those people are not just employees of the hospital trusts; they are also citizens living in the area who are affected by whatever happens within the health service in their region, and in a democracy, they should be free to air their views. In the health service reforms, we are seeing the systematic gagging of employees. I hope that the more liberal-minded Conservative Members will support any argument against such activity. That is long overdue.
When I raised the matter with the chairmen of the Sunderland health authority and the Sunderland health commission, they both agreed that that should not happen, that it was immoral. I then asked what they intended to do about it, but they both said that it was nothing to do with them; it was a matter for the hospital trusts.
I may have a simplistic view of a market, but I always thought that, in a market, the buyer could control the seller. I should have thought that, if a buyer told a seller that he did not like what he was doing, and that if matters were not put right he would cease purchasing from him, he could carry out that threat. Therefore, I was not too convinced by what those two gentlemen had to say.
The fault within the NHS at the moment is the lack of democratic accountability. I hope that the Government's proposals will do something about that. It may be that the organisation would be better off run by civil servants rather than Government-appointed quangos. We may find in the long run that that is more democratic—something that I hope Conservative Members will consider.
I welcome the legislation for the Channel tunnel rail link. Like many hon. Members, I recently travelled from London to Paris on the new train. It was a wonderful experience but, paradoxically, from Waterloo to the Channel tunnel I felt as if were on a suburban branch line, but once the train hit the tunnel and from there on to Paris, one is talking about modern latter-day travel.
I recall three years ago when I was in France that the link between Paris and Calais was under construction. The French have done wonders to complete it so quickly, and it is disappointing to find that there was not the same enthusiasm and support from the Government for the line on this side.
One reason I look forward to that legislation is that, if we have a decent link between the capital and the Channel tunnel, we will also have better links between the regions, the capital and the tunnel. I should like more freight to go by rail—the potential is there. That would coincide with the views of the recent Royal Commission report on pollution and transport, which was not particularly in favour of road transport.
It is interesting that a country similar to ours—at least, it was before unification, but it has changed somewhat now—the former West Germany, sends 35 per cent. of its freight by rail, whereas we send 7 per cent-one fifth of what Germany sends by rail. If we tried to match the figures in Germany, we would have a much better life, a better environment and a little more relaxation for our citizens.
I was interested to read about the agricultural tenancies legislation, at present in embryo. It is interesting, but a word of warning. If the Government want it to be worth while, they may have to forget their paranoia about deregulation. Landlords always have more power than the tenant. That applies throughout Britain. It always has, and it has been exacerbated since 1979 by the Government's legislation.
Landlords will ensure that there is only enough land for tenancies to allow them to get a good price. There could be certain problems with that. If anyone doubts that, they should consider office tenancies. We are led to believe that there is plenty of office accommodation, but anyone who tries to negotiate an unjust lease with a landlord may

be told to stuff it. I hope that that is not unparliamentary language. Other landlords will have exactly the same type of contract.
It is clear that a cartel is being operated. Rent offic:ers point to clauses that allow rent increases but not to clauses that permit decreases. The market seems not to work in that respect. I hope that that will not be the result of the proposed agricultural tenancy Bill.
I welcome the Bill that will establish environment agencies, not least because I represent part of an area in which there has been great concern about the possibility of polluted drinking water because of the presence of mine water. It would be a good thing to bring all the relevant organisations under one umbrella.
The Bill is to be welcomed also because a recent report suggested that the United Kingdom does not come out too well when it comes to environmental conditions and protection of the environment. Our performance does not compare well with that of some of our European colleagues or competitors within the European Union.
Organisations such as the Royal Society for the Protection of Birds, Greenpeace and Friends of the Earth do not have a political agenda in the sense of politics as we understand the term in this place. They say that, unless the Government tackle industry in an appropriate manner, their efforts to protect the environment will be meaningless. There is a widespread view that sometimes there is laxity when it comes to tackling industry, which is still the greatest polluter in the United Kingdom.
Domestic violence has always been a problem. To introduce worthwhile legislation would require—I do not say this flippantly—the wisdom of Solomon. Nevertheless, I am glad that the Government recognise that there is a problem. We cannot begin to solve a problem unless we recognise that one exists.
I am unhappy about the proposed Bill that will bear on evidence in civil courts. It is proposed, it seems, to allow hearsay evidence. Earlier in the century, Lord Justice Birkenhead said succinctly that, in civil cases, the burden of proof was not beyond reasonable doubt, as it was in criminal cases, but somewhat lighter, in as much as it was based on the balance of probability.
Surely hearsay evidence is the last thing that is wanted when the test is the balance of probability. I hope that the Government will think extremely carefully about that before they introduce their Bill. The admittance of hearsay evidence would have many ramifications and could lead to abuses as great as those that have flowed from the Child Support Agency. It could be unpopular with everyone, while benefiting no one.
We are told in the Gracious Speech that the Government intend to introduce a Bill
to tackle discrimination against disabled people.
It is interesting that the Government said that the Civil Rights (Disabled Persons) Bill, which was introduced by my hon. Friend the Member for Kingswood (Mr. Berry), would cost £17 billion. Not everyone agreed with that assessment, but that was the Government's view. The Government say that the cost of their Bill will be £17 million. They claim that it will cost only one tenth of 1 per cent. of the expenditure that my hon. Friend's Bill would have entailed. I do not accept that we can have an equivalent Bill that is reasonable and acceptable at a thousandth of the cost. The proposal is scandalous.
The way in which the Bill of my hon. Friend the Member for Kingswood was dealt with was a disgrace. It was a blight on the House, and an even greater blight on the Government. A Minister had to admit that he had been somewhat economical with the truth. A Conservative Member was rebuked by Madam Speaker for misleading the House. I hope that those involved will never forget that scandalous state of affairs.
One of the worst proposals in the Gracious Speech—it has not attracted much publicity, but it seems that there has been a softening-up operation for about 18 months to two years—is the equalisation of the state pension age. The position of women will be worsened, while men will have the same retirement age. That, of course, is equality. The dictionary is specific when it comes to describing the concept.
I would have liked to see—I think that my view is reflected by many milllions of our people—a common retirement age of 60 years. I think that people would have been prepared to pay for that. That common age of retirement would be popular. It might help people to live longer lives. It would create job opportunities for the young unemployed, who often have families to support. If a long-term view had been taken instead of the short-sighted expediency for which the Government are noted it might have been found economically beneficial to have that common retirement age in terms of public expenditure.
The Government could, at no real cost, have equalised retirement age at 62.5 years. Surely that is not asking too much. That equalisation would have benefited one section of the population while disbenefiting another, but there would have been a tangible result. The present proposals constitute a retrograde step. They amount to deprivation in the name of equality. The object is to save money. There is no concept of justice, equality or even decency.
There is to be a moral breach of contract between the Government and their citizens. I understand that women of about 45 years of age will be worse off. They have been paying national insurance contributions since they became employed. They will get a raw deal. If the same conditions were being offered by a private company, I am sure that they would not be acceptable to the Government or to the population generally.
The activities of the private pensions industry are scandalous, and will cost the taxpayer billions of pounds. A tremendous amount of public money has already been used to subsidise the industry and to try to get people to opt out of state earnings-related pension schemes, and in some instances occuptional pension schemes. If the Government are so concerned about the national insurance fund and future liabilities, and if they want to give people additional pensions, why do they not bring forward legislation to make occupational pensions compulsory upon employers?
I challenge Conservative Members to rise—I am willing to let them intervene—to state that they have opted out of the parliamentary scheme to go into a private pension scheme. I wait with interest. It seems that none of them has done so. That says it all.
Some people have reached retirement age and have then decided to go abroad to join their sons, daughters or other relations. They may have paid their various

contributions for 40, 45 or 50 years. They find that, when they go to live abroad, their pensions are frozen at the level that applied when they reached retirement age. That is scandalous. Any private company who tried to renege on a pension arrangement in that way would rightly be condemned, and would soon be out of business. It seems that the relationship between our citizens and the Government does not matter. There should be trust, but there is not. Instead, there is exploitation.
The retired people to whom I am referring do not live in the United Kingdom and do not have the benefits or disbenefits that flow from that, although they have the disbenefit of frozen pensions. At the same time, they are still allowed to vote in our elections. Even some Conservative Members may perceive that there is a paradox. I hope that they will speak to their Front-Bench colleagues or the Government Whips to ascertain whether something can be done to bring the scandal of frozen pensions to an end. It is a terrible injustice and an indictment of our country.
There is no mention of housing in the Gracious Speech, but in the various different debates many hon. Members have mentioned the problem of social housing in this country. We do not have much trouble with people who are fortunate enough to buy their own homes, although it has to be said that the stock of private housing is deteriorating in quality and there will be a problem in the not too distant future.
It would be wrong to say that we have a housing crisis, although there are increasing numbers of homeless people and homes considered unfit for habitation. I recently happened to read an interesting article by Patrick Minford—I know that the Chancellor of the Exchequer knows him, because Professor Minford is one of his advisers. That article revealed two important facts, the first of which is that, since 1988, private sector rented housing has increased by 11 per cent.
As the Government's deregulation of rents has meant that, in general, private rented housing is about twice as expensive as equivalent council housing, with housing associations somewhere in between, one would have expected the increase in private sector rented housing to lead to more subsidy being paid for housing. We know that, as the private sector is getting more, the public sector is getting less. That must be so, because, according to Professor Minford, since 1979 subsidies for tenanted housing have fallen by 9 per cent. What an indictment.
I hope that, at some time in the future, when introducing a housing Bill, the Government will not try to tell us that they cannot afford to pay housing benefit. They brought the change about. They decided to transfer subsidy from the dwelling to the tenant, and now we are seeing the results, with high private rents having a , debilitating effect on the resources available—and heaven knows, those are few enough.
Every Queen's Speech that the Government have produced has shown that they are good at going back to policies with a proven record of utter failure. Bus deregulation is one example, and another is the obsession with trying to transfer tenancies into the private sector. The only time that we have had a good house building programme it was within the public sector, and we shall not get back to that position until the Government change their views.
Anyone who reads any history on the subject will find that, before the big house-building programmes of the 1920s and 1930s, which were carried on until 10 or 15 years ago, the private landlord was detested, because he provided substandard housing at outrageous prices. That is why we went in for public sector housing. That was a success, so, as one might expect, the Government decided to abandon it.
I tell the Minister that, unless something is done about the accommodation problem, the Government are sitting on a social time bomb. Less and less housing is being built and things are getting worse, yet the Government are not interested enough to suggest anything in the Gracious Speech to help alleviate the problem.
Finally, perhaps the worst, most spiteful and mean-spirited legislation that the Government propose is the persecution of the unemployed that is being introduced under the euphemism of the job seeker's allowance. I should be interested to know what the connotations of that term are. If we require people to be classed as "job seekers", there should be some jobs for them to seek. That does not seem unreasonable, and I do not think that anyone would disagree. People are being trained, often not very well, for jobs that do not exist.
That is not quite the worst thing. The meanest and most despicable aspect is the fact that, although Government economic policies have created unemployment, the Government now seek to shift the blame on to the people whom they have made unemployed. That is totally immoral, and I have no doubt that, as time goes by, people will become increasingly aware of it.
All that is happening at a time when employees' national insurance contributions have never been higher. Already, employees have to subsidise their own common law damages claims against employers, and then have to refund to the national insurance fund anything they have had in benefits—benefits for which they have already paid in their contributions. That is an absolute scandal, chicanery of the worst sort.
Now we find that unemployment payments have virtually been cut by 50 per cent. overnight, from 12 months' entitlement to six months. What a deplorable breach of faith. It should not be allowed in any so-called civilised society. However, I was pleased to notice that that cut will not be made until 1996, and by my reckoning we may be rid of this deplorable Government by then.
I am pleased that there is to be no denationalisation of the Post Office, but I warn my hon. Friends and any Conservative Members who may share my views about that to beware. People such as the President of the Board of Trade are never wrong; they always think that it is other people's fault when they cannot get their own way. Make no mistake about it; the Government will come back to the Post Office in some form or another.
We must be vigilant and wary. The idea has not gone away; we have simply had a stay of execution, as we did with the coal industry. About the coal industry too, apparently, the President of the Board of Trade was right and everybody else was wrong.
I had some sympathy with the hon. Member for Tatton (Mr. Hamilton) when he explained to the House on Monday how he had been ill used by the press and the other media. I share his concerns, although I am talking not about the facts of the case but about the way in which they were presented. However, I should have more

sympathy for the hon. Gentleman and other Conservative Members who feel that they have been treated in the same way if they would press the Government at least to make a start and introduce a statutory right of reply. That does not seem unreasonable.
Individuals with no resources who have been attacked unfairly, unjustly, incorrectly and "unfactually" by the media should have a right of reply. So if the Government want to do something about the media, that is an idea for them to consider. It would also be better if we had an independent statutory press or media complaints council, if not both. Self-regulation seems to be all right for the City and for the media, but it is not considered satisfactory for the trade unions or for local authorities. Surely people must realise that that is inconsistent and deceitful.
The Government have had a rough ride from the media over the past two years, but I should have a little more sympathy for them if they had shown any sympathy when others were similarly attacked. We hear Conservative Members saying that it is deplorable how the royal family, the Prime Minister and certain other people are attacked by the media, but they did not say that it was deplorable when Arthur Scargill was being attacked by the Daily Mirror and the "The Cook Report". That was all right, apparently, but it is not all right now. There should be more consistency and more honour in dealing with such matters. I sometimes think that the Government are frightened to attack the media, whether because of the money involved or for some other reason.
The hon. and learned Member for Burton (Sir I. Lawrence) has left the Chamber now, but I must refer to what he said about the demise of the coal mining industry. That affected me directly, because the last colliery in County Durham was in Wearmouth, in my constituency, but it has recently been closed, to everyone's regret.
It is totally unjustified to blame Arthur Scargill or the National Union of Mineworkers for the demise of the coal industry. There is no proof, and if that is some people's opinion, it is not borne out by the known facts. The people to blame are Lord Wakeham and Lord Parkinson, with their deregulation of the electricity supply and distribution industry, and the President of the Board of Trade for refusing to take cognisance of the most important parts of the Select Committee's report on the subject. They are the people to blame. The Conservative Government closed collieries, not the NUM or Arthur Scargill. I speak as a Member who is sponsored by the NUM, and I often wonder who sponsors the people who condemn the NUM—I will find out.
I was a little disappointed by the Chancellor's response to my intervention earlier this afternoon. I asked why, if the economy was doing as well as we were being led to believe, he needed to punish the less well-off and the , vulnerable in society by the increase in VAT on fuel.
I appreciate that I am not allowed to say that the Chancellor is a liar in the House, but he told me something which I have never heard from any economic source whatsoever. He stated that the poorest in our society were being more than adequately compensated for the increase in VAT. That is what he said, and it will be in Hansard tomorrow. There is not an economist in this country that I have read who comes to the same conclusion. Apparently, it is only the Chancellor who has the information. He should pass it on to all of the learned


bodies. I did appreciate the right hon. and learned Gentleman giving way, but I am afraid that his answer was totally unsatisfactory.

Mr. Richard Shepherd: If the hon. Member for Sunderland, North (Mr. Etherington) will forgive me, I shall not follow on from his remarks entirely. His was a tremendous performance which covered the entire Queen's Speech. We all write our own Queen's Speeches, and we try to commend those things which we wish to support.
I support my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) in his comments about the Ulster Unionists and their leader, and the role of the Prime Minister and those hon. Members from Ulster who have played a part in a process that is clearly of enormous importance to us all. This is almost the first autumn of my adulthood in which, through hard work and difficult circumstances, we seem to have had a tranquillity that has not been here in more than 25 years. I commend—as did my right hon. Friend—the recent winner of the Spectator award and, of course, my right hon. Friend the Prime Minister.
I agree with what has been said, and these matters are difficult. I am, by instinct, a Unionist, and the thought of the United Kingdom breaking up is as antipathetic to me as anything in the political spectrum. Therefore, one is mindful of the work that the Prime Minister has done.
I know that the debate focuses on the economy, and I also refer to the remark by my right hon. Friend the Member for Old Bexley and Sidcup that this is a country experiencing fear. The observation was made that it is not fear but anxiety, but we all know what my right hon. Friend meant by that. There is great uncertainty. The certainty of our youth—that we would have lifelong employment in one job—clearly is no longer the constancy that is faced by our constituents.
There have been tremendous changes, and a society in transition is having to address issues that have perhaps been postponed, set aside and forgotten. Not a lot has been said today in the context of the Queen's Speech about education, as one day was given over to the subject. In essence, we put our education system into tremendous turmoil and there was a time when it looked as if we were entirely dedicated to working against the grain. I have always believed in the principle—although the Whips do not agree—that we should try to work with the grain.
In the end, what are we seeking to accomplish with the changes? Are we improving that which we were before, and is that the end of it? What is the benchmark? I used to ask the former Secretary of State for Education that question, because it is important to know the objectives of the changes and revolution. We have not yet heard a Minister say that the aim of all the changes is that the standard of education and training for the average child, across all ability ranges, will match that for Denmark, Germany or any of our other major competitors. That is a formidable benchmark, because Ministers and the performance of Ministries can be judged by a more absolute definition.
The Organisation for Economic Co-operation and Development relentlessly cites how poorly we perform, yet I see that we are not moving up the charts. I have the greatest faith in the present Secretary of State for Education and believe that, by working with the profession, we can identify the benchmarks and dates by which our children will be educated and trained to the standard of our competitors.
There are common outlooks across the Floor of the House, and we are from the same nation—our "ain folk"—and have common perceptions. One such perception is that improvement in training and education is essential, and another is that the level of investment is important. The Government are, of course, endeavouring to attract inward investment as a replacement for our industry's failure to generate capital and apply it.
My hon. Friend the Member for Harborough (Mr. Garnier), a distinguished barrister, closely followed his helpful and prepared notes, and I heard all the things which we have done. All through my political career, we have cited the miracle of our management of the economy. Hon. Members on both Front Benches have cited it, and I am not making a partisan point. We say all the nonsense things, such as, "Between 12.30 and 12.45 on 1 January, we had the fastest-growing economy in Europe," or alternatively, "Between March 11 and 12, for one and a half hours, we had the fastest-rising rate of exports."
Those are, in truth, meaningless comparisons. They may stir up the press, and they may be points that we can score against each other, but in truth, our lifetime's history shows an almost relentless comparative decline. We are all engaged in a powerful endeavour to change that around.
I was a student in Italy in the early 1960s. If I had said to my fellow students, "I have a vision: one day, you Italians will be as wealthy and prosperous as people in the United Kingdom," they would have thought that that was perfidious Albion speaking sweet words yet again. However, I again refer to the OECD listings and projections which state that, by 1998, either our economy will be the same size as the Italian economy or the Italian economy will be slightly larger. That transformation has happened.
As we battle our way across the Floor of the House, scoring points against the other side and concentrating on the point that it was not 12.15 to 12.30, but 12.15 to 12.29, the nation knows that it has a task in hand. I believe that that rests on certain things which are, I would argue, conservative principles which are shared across the House—a belief in the community, in the maintenance of law and order and in the profundity of our institutions. In fact, the last—the aim of maintaining our institutions—is the most dedicated task of a Government. I touch only on those points because I do not mean to abuse the Government. They have embarked on an important task, and some of their plans are right, although not all by any means—that is the nature of things.
I reflect with some glee—it may be self-satisfaction—that both the shadow Chancellor and the present Chancellor must be joining the former Chancellor in their baths singing with relief at the release from the exchange rate mechanism. I take it that it was a political fashion that three great parties, dedicated to that one belief, were prepared to bring us the consequences of fixing our exchange rate with the third most-traded currency of this


nation, which comes after the United States dollar and our own currency. We linked into that currency which represents less than half our overall balance of trade.
I recommend to the House, although I am diffident about doing this, a course through Skidelsky's second volume of "The Life of Keynes". The arguments are not unfamiliar, even in the history of the House. Throughout the 1920s and 1930s, there were debates on fixed exchange rates, how they were to be fixed and what mechanisms and tolerances would be allowed.
Our economy seems to follow more closely the cycles of the American economy. If we fix our parity to a currency, as we did with the deutschmark, in essence—although it was the exchange rate mechanism—it means that when we get out of kilter, as our economies were, either the exchange rate is propped up by excessive interest rates, because of the needs of the domestic economy, or the reverse happens, as we saw during the Lawson boom.
Constancy of economic management and a clear set of objectives, which are understood by all of us-for example, by small business men, such as I was before I came into the House—are extremely important. Therefore, I give a cheer that, having released ourselves from that burden, we seem to be following a consistent path. That sentiment is, it seems, shared at this moment by those on both Front Benches—they do not want to excite or damage anything that maintains a low level of inflation. Of course, that is set out in the Maastricht treaty, so they can all swear that they are merely acceding to the Maastricht conditions of convergency and that, therefore, we will be governed by that. I support the Government in that policy.
One issue of domestic legislation about which I feel strongly and which touches on another is VAT on domestic fuel. My opposition to it is not based on any grand philosophy, but as a Conservative I believe that the central theme of my party—borne out by the history of the House in the 20th century—is that there should not be regressive tax. That was explained in a rather long-winded way and I am sure that that explanation was more accurate, but, essentially, regressive taxation means that people on lower incomes pay a higher proportion of their income in tax than those on higher incomes. It is an abysmal concept.
That is why, in the early stages in the development of Community funds, budgets and VAT, those things that were absolute basic necessities, the purchase of which represents a higher proportion of expenditure for people on lower incomes, were excluded from such regressive taxation. That seems to be manifestly fair and obvious. We exempted food—I must declare at this stage that I am a grocer—because everyone has to buy it. The food bill represents a higher proportion of the family budget for those on low incomes than it does for rich people. The food budget may be trivial for the rich, but it is a substantial cost for those on lower incomes.
Now we have imposed VAT on domestic fuel and heating. It is clear that many of my constituents—honourable people who have worked through their lives, who have no occupational pension and are dependent on savings which have been eroded by inflation, because of our careers in previous incarnations in the House—are grievously affected by that VAT. All the budgetary allowances that are said to exist still do not take away

from the basic question, "Is it right or is it wrong?" People like me will say that to impose VAT, at a flat rate, on absolute necessities is wrong.
My right hon. and learned Friend the Chancellor is a cheerful man and, amid the bluster, he often adopts poses. I should like to think that he has enough savvy to understand that, to ride public opinion and to take the British public with him, he must act with a sense of fairness. VAT on domestic fuel is regressive and has been perceived to be so by the nation. After all, if we cannot shout at, rail against and change policy in a democracy, what is the point?
The standing of Parliament has been debated in the House and was mentioned by the Prime Minister in his Guildhall speech. If we treat ourselves as if we are nobodies, although we are representatives of truly somebodies—our own people, remember—we are worth nothing. On Monday, we will have a debate on the finances of the European Community. We have not debated that subject since 1988—we could not because it requires a treaty change. That remarkable instrument is taxation by treaty. Somehow that is far more important than any taxation by Budget resolutions, which we shall deal with on Tuesday and subsequently. It takes all sort of precedence over the Budget.
Every year, the Chancellor of the Exchequer and the Government must secure the finances of the country. Every Member of the House may speak in those debates, move amendments and try to shift the Budget resolutions slightly. We all know, however, that if a Government fail to secure the finance to maintain the government of the country, they are no longer the Government.
The chairman of the 1922 Committee decided to make a constitutional intervention. He seems to think that taxation by treaty is of such paramount importance that he advised people to prepare for an election. On the face of it, that is absurd, because if there are people who are bound to maintain the revenues of Brussels it is those on the Labour and the Liberal Front Benches and, I regret to say, my own Front Bench. To suggest that Members of Parliament may not move amendments and may not honour the commitments they have given to their constituents is absurd.
For my part, my election address was particular—I know that I am not alone in that. It said that I did not believe in the Maastricht treaty and the arrangements that followed for it. I made it clear that I would not vote for citizenship for my fellow citizens. That is a decision so profound that only we as individuals can make such a step through a referendum. The House will know that, during the Maastricht debate, there was hardly anything in the treaty that I could support, because it purports to something that has never been put to the British people—that they should be subordinate constituents of another political organisation. My goodness, I have difficulty enough ever convincing colleagues on my own Front Bench to change a policy, but now power, decisions and laws flitter outside my grasp. I may rail here, but where do I sound? No common language exists, nor common Parliament that can reflect the visions, angers, frustrations and outlook of the British people, my own people.
I am told that the whip will be withdrawn on Monday should I move an amendment or not vote in support of the European Communities (Finance) Bill. I cannot believe that a Government of whom I am a supporter, a party that touches deep into the nature of our people, as


does the Labour party, put above the imposition of tax on the people of this country through VAT on domestic fuel, the securing of funds through a treaty for another organisation. I cannot believe that the Government are prepared to do that without being prepared to allow Parliament to exercise the scrutiny and allow the freedom of speech that we expect and demand on the budget of the United Kingdom. It is a curious twist to me. What is the call that puts that demand above our own exigencies and needs?
I am mindful that train fares are going up. They are now so unaffordable that one almost has to take a mortgage out to go to Birmingham. My commuters who must travel will find that their incomes will be squeezed, but that is considered to be of lesser importance than supplying funds to Brussels. I cannot understand that when I try to explain it to my constituents. Why is it that I cannot debate the subject of that money? My constituents do not understand the imperative that makes the Bill the most supreme piece of legislation in the whole programme, which threatens the absurdity of a general election and the withdrawal of the whip. It is a curious balance, which I do not understand.
If we are to stand and reclaim our fortunes with the electorate, it can only be on the basis that we represent someone and something. There has never been a time in living memory when an Administration has been so low in the standing of the people it governs. For me as a Conservative, it is a very important task to reverse that. That is why we cry out.
As for the memorandum from Mr. John Maples, which has been published, I do not know a Conservative Member who has not written large chunks of similar words over the past year. That had no effect, alas, but we will make sure that the views of the people are represented and argued for, because we can make something of them.
I hope that, in the winding-up speech, that fellow traveller of mine for an award by The Spectator will be able to say that it is absurd to try to restrict the freedom of speech of his Conservative colleagues by the threat of the withdrawal of the whip.

Mr. David Hanson: It is a great pleasure to follow the hon. Member for Aldridge-Brownhills (Mr. Shepherd). In the short time that I have been a Member of the House, I have always found his speeches to be full of integrity, passion and independence of thought. That is to be commended and I genuinely appreciated his speech tonight.
In common with my hon. Friend the Member for Easington (Mr. Cummings), I enjoyed the speech of the right hon. Member for Old Bexley and Sidcup (Sir E. Heath). I joined the Labour party because of him, so it was interesting to find that I agreed with him about everything. I am not sure whether I have moved to the right or he has moved to the left, but somewhere down the line there has been a shift in opinion.
The case against the Government on the economy is clear and straightforward. The Gracious Speech covers a number of issues that promise more of the same on the economy, which means a poor deal for my constituents.
Under this Government, millions of British people now face reduced living standards. Tax rises from this tax-cutting Government are being pushed through to pay for economic mismanagement. Unemployment continues to be tolerated, while skill levels are ignored. Each year, £25 billion of taxpayers' money is wasted on unemployment rather put to positive use to create jobs and a better society. Many thousands of people, including many of my constituents, are forced into poverty pay while the Government ignore and, as we have seen this evening, effectively tolerate massive pay rises for executives of privatised companies and others.
The burden of the Government's failure falls on those who are least able to pay. Under the Gracious Speech, public spending will be dramatically reduced and, while much of the Government's policy is deliberate, incompetence still plays a large part in their policy failures.
A Labour Member is expected to criticise the Government, but we have heard much today about what the former hon. Member for Lewisham, West, Mr. John Maples, said in his new role as deputy chairman of the Conservative party. He is a former Treasury man and if we are now going down the pan perhaps he should be given the credit for our reaching this state.
The report, which has been heavily leaked, includes a number of interesting quotes about the state of the economy, to which the hon. Member for Aldridge-Brownhills referred. I hope that I shall not score too many points by agreeing with the hon. Gentleman.
Mr. Maples said:
What we are saying on the economy is completely at odds with experience.
We can all agree with that. He continued:
The reality is now that the rich are getting richer on the backs of the rest who are getting poorer".
Every Labour Member in the House agrees with that. He went on:
The Conservatives have let voters down, they have been in government too long, are complacent, have lost direction, and have failed to fulfil election promises.
What an epitaph for that former Conservative Member, who paid the price at the 1992 general election. I understand that he is now seeking a place in the House as the possible candidate for the constituency of Woking. He might be better getting a job as a gravedigger.
John Maples is not alone in his views. Today's issue of The Economist. covers a number of points that compound the Government's current woes. In the latest economic forecast for Britain, it says that the best is over and that the economy will decelerate in 1995, living standards will slip, falls in unemployment will slow to a crawl and the country will slide back to its traditional place near the bottom of the international pile. Incidentally, The Economist is edited by the hon. Member for Kensington (Mr. Fishburn), who may apply for a job as deputy chairman of the Conservative party in the near future.
One aspect of the Chancellor's opening speech that I found interesting was that he did not seem to realise that the Government have been in power since 1979. All the points that he made related to the past three months, the past six months or the past nine months—perhaps the past quarter of an hour on the clock, as the hon. Member for Aldridge-Brownhills said earlier. May I put the


Government's economic performance in the context of the past 15 years and thus illustrate the enormity of their failure?
Government investment has been lower than that of any other G7 country during the 1979–93 period. Exports have seen their lowest rate of growth since 1979. On skills training, we have the second lowest number of 18-year-olds in further education of all OECD nations, with the exception of Turkey. This year, £119 million has been cut from the training budget, and £400 million has been cut from the training budget in the past three years.
The number of people out of work for more than a year has increased by 50 per cent. to almost 1 million since 1979. Despite recent falls in unemployment, which we all welcome, 2.6 million people are still out of work in Britain. Perhaps the most damaging statistic of all is on poverty, which is a serious issue in my constituency. Since 1979, the number of families with incomes below half the national average has increased from 5 million to 13.9 million. That statistic brings home the misery caused by the Government's economic failure during their period in office.
We still have a trade deficit of —6.1 billion, which, according to Treasury forecasts, will rise to £7.5 billion in 1995. To pay for their prolonged economic failure, the Government in the Gracious Speech make clear commitments for continued public spending cuts and, in next week's Budget and beyond, they plan to impose massive tax rises. What Mr. Maples did not mention is that this is a Government of "pay more and get less". Even before the forthcoming Budget we shall see tax rises in the form of increased national insurance, VAT on fuel, home insurance, car insurance and on mortgage tax relief, with allowances frozen.
For an economy of which the Conservative party are so proud, the tax bombshell which the last election was supposed to bring has brought a Tory tax bombshell of a 7p rise in the effective rates of income tax.
As has been said by many hon. Friends, the most iniquitous issue is that of VAT on fuel. Last Saturday, my local Labour party submitted 6,000 postcards calling on the Government to stop VAT on fuel to houses in my constituency of Delyn. By today, 750 postcards had been returned to me, duly stamped, by constituents who are concerned about the iniquities of that tax.
That protest is in addition to petitions and the general concern that has been expressed about VAT. Every hon. Member knows that people do not send postcards in that number back to their Member of Parliament unless they feel extremely strongly about an issue. I hope that, if we achieve nothing else this evening, we can have a commitment from the Government that that tax will be stopped.
If it cannot be stopped for domestic customers, I hope that the Treasury will at least say something about the effect that it will have on charities. This morning I received a letter from a constituent representing a church. He complains bitterly about the tax on charities, which cannot claim back that taxation.
Perhaps we should not be upset about that tax but should expect it from a Government who have now imposed tax rises from 34.3 per cent. of gross domestic product in 1979 when my party left office to 37 per cent. of GDP in 1995–96. As has already been said, the taxes are unfair and regressive because anyone who earns

£64,000 a year or more now pays less tax than in 1979 whereas nobody earning less than £64,000 a year pays less tax.
We have also seen public spending cuts on schools, housing and training. As my hon. Friend the Member for Sunderland, North (Mr. Etherington) said in his speech, the pension age for women is to go up. The Conservatives are giving us less for more because of their basic economic failures. The experience of my constituency in north Wales is very much in line with the thoughts of chairman Maples. I want a strong Wales and a strong Delyn constituency, but the position is drastically affected by the Government's economic policies. North Wales has experienced the loss of its economic and industrial base. We have lost textile, steel and coal industries. When I was selected as the candidate for my seat seven years ago, 800 people worked in the coal mining industry in my constituency. Today, less than 160 people work in that industry.
Only today, I received a letter from British Aerospace on the borders of my constituency telling me of a further 200 redundancies. The Government's so-called "economic miracle" is missing my constituency and those whom I represent are paying for the Government's economic failures with their jobs, their livelihoods and tax rises. In my constituency, a quarter of 18 to 24-year-olds are unemployed and 2,500 people who remain unemployed face the job seekers' allowance, which is the only economic measure that the Government can bring forward with confidence. Massive blows have been dealt to the local economy with the transfer of jobs back to America and the deindustrialisation of Raytheon Jets, a British company which has produced British aircraft for many years but which has now been shipped back to America by a purchase on the free market.
My constituency remains among the lowest paid regions in the United Kingdom. I am pleased that my hon. Friend the Member for Darlington (Mr. Milburn) is in his place, because I read yesterday, with great interest, the figures that he produced from the House of Commons Library. In Wales, 40 per cent. of the work force earn below 68 per cent. of average United Kingdom earnings—the decency threshold—and Wales is at the bottom oil the pay league in Europe. How does that compare with the Government's attitude to chief executives of major companies in the private and public sector? I refer the Minister to early-day motion 87, which has been signed by a number of hon. Members present today.
In the past year, salaries of chief executives have on average increased to £208,000 per annum—an increase of —50,000 per annum on 1993. The Prime Minister has exhorted companies to continue to exercise restraint and to continue to exercise control on chief executives' salaries, yet overall there was a £50,000 increase in the average salaries paid to chief executives between July 1993 and July 1994. That statistic does not take into account British Gas's chief executive, Cedric Brown.
I should not be surprised because, since 1979, the top 1 per cent. of British taxpayers have received 30 per cent. of the tax cuts available, from £75 billion in tax cuts paid to those richest sections of our community. I am surprised, however, at the complete failure of the Chancellor of the Exchequer to condemn those pay increases adequately this afternoon, and to call for further regulation by the Government of shareholders' ability to authorise such pay rises at the moment.
We need a radical shift in policy. We need to consider a range of issues to raise the profile of a strong economy and to rebuild that economy for our people. We need to ensure that we release capital receipts to boost housing, because housing is needed for our people. We need to ensure that there is long-term, Government-led investment in infrastructure, in rail and capital health and education projects. We need to ensure that there is a real skills boost for training and a job guarantee for school leavers. We need to ensure that there is public spending on energy efficiency and environmental improvements—on the things that people need.
The one thing that surprises me in the Gracious Speech is the Government's commitment to reduce the national share of income taken by the public sector and public spending. Public spending provides things that people need. It provides jobs and investment, and we should seek to increase it in the future. We need social justice, we need a minimum wage for Wales and we need to take steps to tackle the salaries of chief executives. We need to ensure that there is fairness and justice in our tax system, that value added tax increases are stopped and that windfall taxes are imposed on the profits of privatised utilities.
We need to ensure that there is fairness in our approach to society. It is blatantly not fair for chief executives to increase their salaries, week in, week out, at the same time as the Government abolish wages councils, do not allow a minimum wage and continue to force people into low-paid, low-skilled employment. It is not fair to have regressive taxation, such as value added tax on fuel, when people in the richest sections of our community are receiving massive tax handouts.
We need to start to tackle unemployment and poverty, not attack unemployed people and poor people. That is why the Government are wrong, that is why they will face a vote this evening on the amendments and that is why I will be proud to support my colleagues in the Lobby.

Mr. James Clappison: I welcome the opportunity to take part in the debate and to follow the hon. Member for Delyn (Mr. Hanson), who spoke forcefully about matters that he regards as being important to his constituents. I am sure that they would be pleased to hear him speaking forcefully. I do not know whether Opposition Front Benchers will be quite so happy with what he said.
It sounded very much as though the hon. Member for Delyn was making a strong plea for higher taxation for its own sake and to fund extra public expenditure commitments. Opposition Front Benchers appear hesitant about that. I am not sure that they will welcome the large increases in taxation that will be necessitated by that.
It is a great pleasure to follow some of the distinguished speeches that we heard earlier, and to follow a former Prime Minister, my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath), and an experienced Member of the House, who spoke forcefully and from conviction, my hon. Friend the Member for Aldridge-Brownhills (Mr. Shepherd).
If I may, with some temerity as a junior Member of the House, I shall follow what my right hon. Friend the Member for Old Bexley and Sidcup said. Two points in his speech struck a special chord—first about the standing of Parliament and, secondly, about the fear of unemployment.
As for the standing of Parliament, I hope that I shall not be unduly partisan if I say that, had I been one of the television viewers whom my right hon. Friend the Member for Old Bexley and Sidcup took as an example, I would have been somewhat surprised by the debate—at least by the way in which it began. It was supposed to be a debate about economic policy.
As I listened to the opening speech of the hon. Member for Dunfermline, East (Mr. Brown), I waited and waited for mention of economic policy, but very little came. We had a tour around identity cards, executive pay and the public utilities, and we certainly had a lot of the flotsam and jetsam of political tittle-tattle, but we heard little about economic policy. Whenever the hon. Gentleman mentioned economic policy, he moved on as though he had touched on something that was extremely dangerous for him.
The hon. Member for Dunfermline, East and my right hon. Friend the Member for Old Bexley and Sidcup mentioned the fear of unemployment. I think that it is important, although I take some issue with the way in which it has been presented to the House because it is the political fashion of the moment to talk about fear of unemployment. Undoubtedly, such fear exists. It has been driven by profound economic changes that are taking place in the world economy, with changes in technology, developments in technology, developments in the economic process and the rise of new and competitive economies.
That has not happened overnight. It was happening long before the pundits of political fashion started talking about fear of unemployment, and it will continue to take place long after they have stopped. I know from my constituency, Hertsmere, that the fear of unemployment was at the forefront of electors' minds at the last general election. My constituency was one of those parts of the south-east that was touched by the recession for the first time after a long period of economic growth and prosperity. I know that that is very much on my constituents' minds.
At the last general election, my constituents wanted policies that would reduce unemployment, and I am pleased to say that since then unemployment in my constituency has fallen by about 20 per cent. There are now 700 more people in jobs, and I very much hope that unemployment will continue to fall.
What is the answer to the fear of unemployment? We cannot turn back the important changes that have taken place in the world. Even though people are in jobs, people are changing jobs more often and job security is not what it was, and that worries people.
As people enter the work force, we must educate and equip them for the changes in technology and in working conditions that they will experience throughout their working lives. I welcome the profound changes that have taken place in education in the past 15 years. The huge increase in the proportion of young people entering higher education must help in meeting that economic change; so too must the revolution that is taking place in vocational


education, and the great importance that has been attached to that through the introduction of national vocational qualifications and general national vocational qualifications. I welcome those developments, which will help my constituents a great deal.
Although there is no mention of new legislative measures for education in the Gracious Speech, I welcome the fact that legislation that we have enacted is driving on a process of reform in education, raising standards and creating new opportunities. I am pleased to see that the Labour party is at last responding to those changes. It must be ironic for the hon. Member for Dewsbury (Mrs. Taylor) that her opposition and hostility to league tables has now been ditched. I look forward to Opposition Members being dragged kicking and screaming towards other reforms that are definitely helping to raise standards.
I hope that the Labour party will reconsider its hostility to grant-maintained schools and assisted places. I feel strongly about that scheme because, as a result of it, many hundreds of children from lower-income families in my constituency now have the benefit of being able to choose an independent education. One way that we must deal with big economic changes is through improving education and revolutionising our attitude to skills and training. The second way to deal with the changes is to create sustainable long-term growth. Even if we have an increasingly well-educated and well-trained work force, they will still suffer if the economic policies are not in place to create sustainable growth, which is such an important part of our future.
The hon. Member for Dunfermline, East mentioned sustainable growth once in his speech and then passed on rapidly. He may feel a certain discomfort in talking about sustainable growth. Even bearing in mind the strictures of my hon. Friend the Member for Aldridge-Brownhills about economic policy and its transience, it is important to keep in place the conditions that are making our industries and businesses more prosperous and profitable, and providing jobs for so many of our constituents. The hon. Member for Dunfermline, East would have done far better to devote more attention in his speech to the conditions for sustainable economic growth and the sort of policies that will nurture it.
Earlier in this Parliament Opposition Members started to talk about some of the constraints on economic policy that traditionally limit economic growth in this country, and have done so for a long period—problems of inflation and balance of payments constraints. The hon. Member for Dunfermline, East did not mention trade. Conservatives can take some satisfaction from the fact that we have introduced policies that are resulting in high growth and low inflation. Although it may be painful, I urge Ministers to keep taking important long-term decisions to keep inflation down. That may be mundane, but it is extremely important because so many times in our recent economic history—certainly up to 1979—growth has been achieved and then blown off course by inflation after a short period.
It is also important that we should maintain our good balance of trade. Opposition Members have devoted little time to that. Exports are performing well—a fact that bears repetition. Much encouragement can be drawn from the recent good news on exports and our future prospects. That may have a good deal to do with our present competitive exchange rate. Once again, I accept the economic views of my hon. Friend the Member for

Aldridge-Brownhills—certainly our increasingly competitive exchange rates have been a factor in promoting exports.
Our position is also explained by the underlying strength of the economy—the strength in the real economy, manufacturing, production and investment has been reflected in our balance of payments figures. Some measure of the underlying strength of our economy and the successful conditions now in place is reflected in the high level of inward investment in this country. Overseas investors come to this country, see that it is a good place to set up in business, produce and expand, and in turn make a definite contribution to our exports and balance of payments.
I welcome the fact that 36 per cent. of all inward investment in the European Community comes into this country. I also welcome the fact that some of it is at last finding its way to my constituency. Various firms from Germany, the United States and other parts of the world are choosing to set up in Hertfordshire and helping to create employment. Many hundreds of the jobs that have been created in my constituency since 1992 are no doubt due to inward investment. I strongly urge my right hon. Friends to keep in place those policies that are doing so much to stimulate inward investment, which is a tribute to the strength of our economy.
Rather than talk about sustainable growth, Opposition Members, particularly the hon. Member for Dunfermline, East, spent much time talking about the so-called windfall tax and attacking public utilities. Since the election of the right hon. Member for Sedgefield (Mr. Blair) as Leader of the Opposition, we have heard a great deal about new Labour. One of the propositions said to apply to new Labour is that it is friendlier to the market than old Labour, with its tradition of clause IV, high taxation and excessive regulation. But there is not much evidence of that in Opposition Members' approach to the windfall tax.
The best form of regulation of the utilities is competition wherever possible. For that reason I welcome the proposal in the Queen's Speech for the liberalisation of the gas industry. Where competition is not possible, regulation must be applied, but it must be done in such a way as to enable profits to be made and investment to take place. Opposition Members show no enthusiasm for extending and promoting competition and do not talk of regulation; their first instinct is to reach for taxation. That is their answer to the problem, but is it the right one? What effect would taxation have on the privatised utilities?
Those utilities are already regulated, and subject to ordinary levels of corporation tax and other taxation. The effect on them of more taxation would undoubtedly be to take away all incentive to invest and seek a return on capital. It would take away all incentive to keep down cost, innovate and manage affairs efficiently. The effect would be to depress investment in the utilities and depress their performance in providing customer service and lower prices.
We have had an artificial debate about the utilities, but we should not lose sight of the progress made by the privatised utilities in providing better services at lower cost and passing on benefits to the consumer. The Opposition have not attacked any of those aspects of the performance of the privatised utilities, but have attacked executive pay. That illustrates Labour's basic hostility to the market economy.
The reasons for Labour's policy run deeper, though. The Opposition face their traditional problem of how to fund public expenditure. The trap that they face—higher taxation for higher public expenditure—has been avoided, they believe, by their series of gimmicks and irrelevant ideas such as the windfall tax. That problem will come back to haunt the hon. Member for Dunfermline, East after his speech today. The Opposition will just have to face up to the fact that their commitment to increasing public expenditure will inevitably mean higher taxes. There is no way out through gimmicks.
The Opposition must also face up to the fact that ours is a growing economy, in which people are going back into jobs and paying tax instead of receiving benefits. We have a policy framework which is achieving economic growth. If the Opposition want any credibility, it is incumbent on them to say how they will change our policies, how they could do any better and how they can avoid the risks associated with their traditional ways of managing the economy, which amount to lower growth, higher inflation and higher taxation. Those problems remain for the Opposition to confront.
After all the flotsam and jetsam that we heard from the hon. Member for Dunfermline, East today, after all the lighthearted banter, the Opposition still have to face up to some serious policy decisions, which they conspicuously failed to do in today's debate.

Mr. John Hutton: I should like to comment on many aspects of the Gracious Speech, but I shall confine my remarks to those parts of it that relate to the conduct of economic and monetary policy in the United Kingdom. First, however, I should like to comment on some of the excellent speeches made in the Chamber today. I think in particular of certain speeches by Conservative Members.
I strongly agreed with what the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) said about unemployment and the rising tide of insecurity that is overtaking so many communities. His remarks were highly pertinent and they threw into stark relief some of the more bumptious comments by the Chancellor.
I also strongly agreed with what the hon. and learned Member for Burton (Sir I. Lawrence) said about the need to win the battle against drugs and drug-related crime. We know that in many countries around the world crime is having a measurable effect on economic activity. Furthermore, I strongly agreed with what the hon. Member for Aldridge-Brownhills (Mr. Shepherd) said about the need to avoid the second stage of the imposition of VAT on domestic fuel. I am sure that, if that question were to be resolved by a free vote in the House, there would be no majority for the Government's policy.
It was clear from the Queen's Speech and from speeches by Conservative Members tonight that the Government have committed themselves to a continuation of current economic and monetary policies. The Chancellor painted a rosy picture of the economy, but it is important to appreciate the full impact of what John Maples, deputy chairman of the Conservative party, had

to say on the subject: that there is a gulf between what Ministers say about the economy and what our constituents experience.
There have been, to be sure, some welcome developments in the UK's performance. I think of the fall in unemployment—although there are real arguments about how many new jobs have really been created in the past two years. I think also of the continuing low level of inflation and the increases in output. All these are welcome, but we need to take into account, too, the advice of many economists, who maintain that, although there have been positive developments in the economy, they relate exclusively to macro-economic statistics. Everyone knows that the British economy continues to suffer from a number of serious structural problems.
Behind this cyclical recovery there are continuing difficulties: low levels of investment, increasing job insecurity and—despite what the hon. Member for Hertsmere (Mr. Clappison) may say—problems to do with the quality of certain supply side measures, especially those that relate to training and education. So, although there may be signs of improvement in the economy, they should not be allowed to mask the continuing difficulties that British business and our constituents will experience in the years ahead.
There has been a great deal of comment in this debate on the Maples memorandum. It is important to remind ourselves of the observations by the deputy chairman of the Conservative party on the Government's record. It is a rather miserable audit of the Government's credibility and their stance on the economy. Mr. Maples says that most people believe that the Government are
out of touch, lying, don't care, … are stupid".
He also draws attention to the fact that previously strong Conservative supporters complain:
There is a feeling of powerlessness and insecurity about jobs, housing, health service, business, family value, crime … and no vision of where we are heading … Very few people think we are out of recession.
For obvious, partisan reasons, the Chancellor of the Exchequer thinks that we are. We cannot have sensible debate about the economy and economic policy by ignoring the difficulties that have still to be overcome.
The Government's economic policy has been characterised by boom and bust. Booms, which are usually short term, are followed by ever-deepening recessions. Since 1979, Conservative Government has been characterised by unacceptably high unemployment. Those years have been marked by increasing signs of social division. There have been significant reductions in manufacturing capacity and a completely inadequate approach to training and vocational education.
To examine the first of those three significant structural economic problems, let us look first at investment, which is still 8 per cent. below its pre-recession level. In the period 1979 to 1993, the United Kingdom invested a smaller proportion of GDP than any other G7 country. Although the annual rate of investment increased by 5.4 per cent. in the second quarter of 1994, it was lower than in the previous quarter. That percentage is largely accounted for by an anomalous low figure in the second quarter of 1993.
Many hon. Members will have noticed that last week there was evidence that manufacturing investment is still not increasing. It fell in the third quarter of this year. Spending on plant and machinery, which is fundamental


to maintaining competitiveness and building for the new markets of the 21st century, rose barely at all in that quarter. It was little different from the amount invested a year ago. That must be set against the background of record cash surpluses being held by leading British companies. It now amounts to £9.5 billion, but investment in manufacturing plant and equipment remains static. That is worrying and it should worry the Government.
Rolls-Royce is one of our key industrial companies, but last week it announced that the future for car engine manufacture in the United Kingdom will depend upon finding a foreign partner to support its investment programme. There is much talk that that partner could be Mercedes. Rover has been sold to a foreign car manufacturer. That paints a more realistic picture of some of the continuing problems on investment.
Hon. Members may have seen in The Observer an interesting survey of recently established small businesses. More than 700 such businesses were surveyed and some of the findings are significant. One of them was that five times as many service companies are being established as are companies producing goods. I have nothing against the service sector. It employs millions of people and provides essential employment throughout the country, but it is clear that our manufacturing base continues to shrink. That is clearly evidenced by the number of new businesses that have been set up in the manufacturing sector.
Another significant indictment is the fact that 73 per cent. of the small businesses that were surveyed in The Observer survey felt that the Government were not providing enough help to set up small businesses. Only one third of the companies surveyed had heard of the Government's enterprise investment scheme, which is supposed to act as a sort of business angel to attract private capital into small businesses. There has been considerable progress, but we should, and could, be taking additional measures to help those small businesses which are so important for the future of the United Kingdom economy.
Before leaving the subject of investment, let me say something about the shipbuilding industry, which is of particular importance in my constituency. Employment in the VSEL yard stood at more than 14,500 in 1990. It was, without question, the largest and most significant employer in the south Cumbria area. That figure has fallen to below 6,000 in less than four years and all the available evidence suggests that it may fall further. There have been significant job losses throughout the shipbuilding communities in Britain—in particular, because of the deplorable closure of the Swan Hunter yard in Tyneside, which could have been avoided had the Government shown any commitment to the shipbuilding industry.
The shipbuilding industry is not a smoke-stack industry; it is not an industry of the past; it is not about dragging heavy objects over steel floors and men wearing hobnail boots. It is a high-tech industry with some of the most recent investment in plant, equipment and machine tools anywhere in the heavy engineering sector of the United Kingdom economy, but it is still struggling and facing significant job losses.
The Government should first recognise the importance of the shipbuilding industry to the manufacturing economy, but they should go further than that and


recognise that the technologies associated with shipbuilding can play a important part in reviving our manufacturing base and providing new jobs for the future.
In that context, the Government must clarify their policy towards the shipbuilding industry. We know that the seventh directive is to expire at the end of the year and we have had some suggestion from the President of the Board of Trade that the Government intend to maintain the shipbuilding intervention fund at a 9 per cent. subsidy throughout 1995. It is important that they do that until there can be full and comprehensive implementation of the OECD agreement on state subsidies to shipbuilding.
In addition, the Government could take a more significant step to help the merchant shipbuilding industry in the United Kingdom by improving the home shipbuilding credit guarantee scheme operated by the Department of Trade and Industry.
At the moment, a company that wants to secure the construction of a new merchant ship in the United Kingdom has access to guaranteed loans and a low rate of commercial interest on those loans, but the loan has to be repaid within the fixed period of eight and a half years. That compares unfavourably with similar regimes operated in many other OECD nations, particularly the United States.
The Government and the DTI can examine the scheme without needing to bring any further legislation to the House. They should ask themselves whether the loan period could be extended and whether it would be reasonable in the circumstances, and against a background of an expected substantial increase in the volume of demand for merchant shipbuilding in the European Union, for the Government to adopt a more generous approach to that loan guarantee period. Shipbuilding and ship repair associations are urging the Government to move to a 12-year loan repayment period. That would offer the prospect of many United Kingdom yards securing extra valuable business.
The shipbuilding industry therefore reflects and provides a example of where the Government have gone wrong on manufacturing. It is a modern industry. It is capable of competing with the best yards in the world and Europe. Many United Kingdom merchant shipbuilding yards are among the most efficient and viable yards anywhere in western Europe. I hope that the Government look seriously at a range of measures—two of which I have mentioned tonight—to help the merchant shipbuilding industry in the United Kingdom get on with the rest of its life and prosper into the 21st century.
Another area where there is significant reason for concern and for reservations about the conduct of United Kingdom economic policy concerns an issue referred to by the right hon. Member for Old Bexley and Sidcup—.the growing tide of job insecurity that is plaguing many communities in the United Kingdom. It is ironic that the Government's policy of labour market flexibility which the Secretary of State for Employment has been trumpeting recently may be one reason why there is no feel-good factor in the British economy.
The Government have pointed to signs of recovery in the economy, but our constituents cannot see those signs. There is no evidence that people feel better off. In fact, people feel that they are under increasing financial


pressure. They are worried about losing their jobs. They know that the welfare state is being attacked and that employment rights are constantly being undermined.
The policy of labour market flexibility is a problem for the Government because it is compounding those feelings of insecurity. It is also encouraging a neglect of proper training and investment in our work force. Quite simply, that policy has misfired. There must be a balance between social justice and economic efficiency, but the Government have moved the balance between those two issues too far in one direction. Successful economies around the world, particularly in western Europe, have shown that it is possible to combine higher levels of social protection and improved economic performance. Germany and Japan provide good examples of that.
We should bear in mind the comments of the right hon. Member for Old Bexley and Sidcup that it is important that we recognise the limits of private enterprise in dealing with some of the huge problems associated with regularly retraining our industrial work force. It is unreasonable to expect the private sector to cope with those huge problems on its own. We need a greater and improved commitment from the Government. The Department of Employment's budget reveals that expenditure on industrial training is likely to fall.
We should be pursuing policies that will enable those on welfare to find a way back into full and relevant employment. The challenge for the Government is not to find ways to dismantle the welfare state—which is what the Government seem to have set themselves as their principal objective—but to find ways to modernise the welfare state and make it more relevant to the needs of people who find themselves, through no fault of their own, out of work.
With regard to the job seeker's allowance and the possible threat to industrial injuries benefit, to which the right hon. Member for Old Bexley and Sidcup referred, the agenda in the Queen's Speech is bleak. It is also irrelevant, because the Government's task is to promote not greater feelings of insecurity but more social cohesion. Through the promotion of greater forms of social cohesion, the problems that we are experiencing with the British economy and the lack of the feel-good factor could well be addressed successfully. In addition, the taxpayer has to foot a huge and irrelevant bill for expenditure which should not have been incurred. I believe that we can do considerably better than that.
If we look back over the past 12 months and consider the achievements that the Government have claimed for themselves in respect of the conduct of economic policy, I believe that we can conclude that the Government could have done better. The signposts that the Chancellor of the Exchequer laid before us today as providing evidence of the Government's success are much more mixed than he wanted us to believe.
The evidence is mixed. There is a considerable area in respect of which the Government can make improvements across the spectrum of the conduct of economic policy. I urge my colleagues to support the amendment in the name of my right hon. Friend the Leader of the Opposition to show that we believe that the British people deserve better than this.

Mrs. Ann Taylor: The final day in the debate on the Queen's Speech began with discussions on the economy and it ranged very widely, as is inevitable on such occasions. I must admit that, two hours ago, I considered asking the right hon. Member for Old Bexley and Sidcup (Sir E. Heath) if I could re-run some of his remarks instead of making my own speech as I thought that his comments were very pertinent to many of the problems that the country is facing. I was particularly interested in the right hon. Gentleman's comments about the salary of the chairman of British Gas and the agony of the large number of his constituents who are affected by the Child Support Agency. In particular, I draw the attention of the House to what the right hon. Gentleman said about the fears and insecurity facing the people of Britain at present.
Other hon. Members have also struck a chord. My hon. Friends the Members for Easington (Mr. Cummings) and for Barnsley, West and Penistone (Mr. Clapham) spoke in detail and with great feeling about the way in which their communities have suffered from the colliery closure programme and the Government's insensitivity to their plight. My hon. Friend the Member for Sunderland, North (Mr. Etherington) made a strong, passionate speech about how his constituency has been affected by major problems in the national health service. My hon. Friends' speeches will be appreciated.
The Chancellor of the Exchequer hid behind the need to preserve Budget secrecy as a reason for refusing to answer any vital questions. My suspicion is that the Budget, when we see it, will have as little relevance to this country's problems as the Queen's Speech has. Indeed, I expect it to be in line with the Chancellor's overall strategy of keeping his head down and looking for a way of selling the remains of the family silver so that he can fund temporary tax cuts at the time of the election.
I saw no sign in the Chancellor's speech that he is heeding the advice of the deputy chairman of the Conservative party. There was an absence of killer facts, as we have been told to expect, in what the Chancellor said—except perhaps the one potentially suicidal statement which might come back to haunt him in future. The Chancellor said that he could not have imagined a better economic background against which to introduce his Budget—what a hostage to fortune, especially as he explained a few minutes later that we should not take too much notice of estimates because the outturns are always different. If we take the Chancellor's statement at face value, and if everything is as good as he claims, there will be no need to double VAT on fuel on Tuesday.
We shall remind the Chancellor of his remarks today on many occasions in the coming year. We shall see whether he is right, or whether The Economist is right to predict that the economy will decelerate in 1995, with living standards slipping and with falls in unemployment slowing to a crawl. Perhaps we should not have expected much of substance from the Chancellor, who was distinctly uncomfortable this afternoon, especially when reminded of his comments about the lack of value that we should attach to promises made in Dudley—another remark that we shall hear more about in the next couple of weeks.
By contrast, my hon. friend the Member for Dunfermline, East (Mr. Brown) has outlined the purpose of our amendment—the
positive measures to remove the fear of unemployment
and to reduce unemployment. My hon. Friend outlined a programme of measures which could make an enormous difference in a very short period. They are designed to meet the need to release capital receipts, the need for a small business expansion scheme, the need for an environmental task force, and the need for tax rebates for employers who take on the long-term unemployed. In short, it was a constructive package of positive measures to which the Chancellor of the Exchequer would do well to listen, because the country would certainly support them.
Many people watched the state opening of Parliament on television. Some watched for an insight into the workings of Parliament, some for the pomp and pageantry, and some to hear the content of the Gracious Speech. This year, those who watched and listened were left with a common thought: "Is that it? Is that all? Is that the extent of the Government's solution to the problems that Britain faces?" Was that all that Her Majesty's Government believed needed to be done—all that they were offering? If this year's Queen's Speech represents the collective wisdom of the Cabinet, the poverty of its content proves that the Government have run out of steam.
Given the Government's record in the past 15 years, it might be considered a blessing if Ministers intended to start twiddling their thumbs for the next year—a relief not to have more so-called radical legislation. That might not matter so much, were it not for the desperate problems faced by so many people: unemployment, fear of job losses and the prevalence of temporary contracts are all breeding insecurity, as is the fear of crime and the loss of confidence in our health service. There are no answers to those problems in the Queen's Speech.
What the Queen's Speech tells us is that the Government are completely out of touch with the needs of the country and the priorities of its people. Not only Opposition Members believe that; Conservative Members who read The Daily Telegraph, as I am sure that many do, will have read the comment that the
legislative proposals and policy initiatives were so insubstantial that one wondered why it was necessary for Her Majesty to drive down Whitehall to deliver it.
Nothing that we have heard in the past few days has done other than confirm that view.
The Government should be tackling unemployment; instead, they attack the unemployed. They should be reducing the need for people to claim benefit; instead, they reduce the rights of claimants. They should be tackling the problems of the Child Support Agency, not sweeping them under the carpet. As my hon. Friend the Member for Sunderland, North pointed out, the Government should be intent on improving front-line services in the national health service; instead, as the Queen's Speech tells us, they are to
bring forward legislation to make further improvements to the management of the National Health Service".—[Official Report, 16 November 1994; Vol. 250, c. 6.]

We all know that every so-called reform of that kind has simply led to more bureaucrats. The number has increased from 510 in 1986 to more than 20,000 last year, and the total administrative salary bill for the NHS is now £1.5 billion.

Mr. Gallie: The other day I visited a hospital in the constituency of one of the hon. Lady's hon. Friends, the hon. Member for Carrick, Cumnock and Doon Valley (Mr. Foulkes), where I met a lady who had been advised seven weeks ago that she needed the hip replacement, which she was now in hospital to receive. That is something that the Labour party could not have dreamed of a few years ago. Does that not show that the Government are doing well in the health service and will continue to do well in other areas?

Mrs. Taylor: The hon. Gentleman has a nerve to talk about hospital services in Scotland, where the Government have just wasted more than £30 million of taxpayers' money on a private hospital.
Our constituents do not want further improvements of that kind, which only lead to bigger bills for the administrative side of the health service. Nor are they lobbying for the privatisation of the Crown Agents, or indeed for competition in the gas industry—which, as my hon. Friend the Member for Dunfermline, East (Mr. Brown) pointed out, will result in regional monopolies in place of a national monopoly. But Labour Members—and, I am sure, Conservative Members—are hearing what our constituents think of the new surcharge on those who cannot pay their gas bills instantly. Even more, we are hearing what our constituents think about the unbelievable and outrageous increase in salary for the British Gas chairman.

Mr. Michael Stephen: Is it not the case that the regulator of the gas industry will not permit the company to increase prices to the consumers in order to pay salary rises? Those salaries have to be paid for out of the money which would otherwise go to the shareholders, who can complain about it at the next shareholders meeting if they see fit. Moreover, the 2.9 per cent. price increase is spread over the past three years and thus amounts to a rise of less than 1 per cent. a year—well below the present extremely low rate of inflation.

Mrs. Taylor: I think that the hon. Gentleman doth protest too much. If he takes that view, he cannot object to the new measures proposed by the Labour party to give new powers to the regulator. It is interesting that today and throughout this week not one Minister has condemned the increase to the chairman of British Gas—[Interruption.] There is condemnation and condemnation, obviously. The only Conservative Member who clearly condemned it was the right hon. Member for Old Bexley and Sidcup. That increase in salary is an insult to every family and every pensioner in Britain, especially when the Government are on the verge of doubling VAT on fuel and not compensating pensioners for all the increased bills that they will have to pay.
Recently, Ministers have started to complain about the cynicism of the British public. That seems to be their latest theme in countering the fact that they are doing so badly in the polls. I wonder who Ministers thank is responsible for the cynicism that exists in British politics. How can Ministers promise that there will be no increase in VAT or national insurance and no reduction in


mortgage tax relief and then, when they break those promises, complain that the British public are cynical? As my hon. Friend the Member for Delyn (Mr. Hanson) said, do Ministers think that the British public cannot add up the costs of the tax increases that we have seen since the last election?
National insurance is up from 9 per cent. to 10 per cent. Mortgage interest tax relief has been reduced. Personal allowances have been frozen. There is a new home insurance tax, a new car insurance tax and a new airport tax on those who can afford holidays abroad. And there is VAT on fuel. Clearly, Ministers are hoping that the electorate will fall for the pre-election bribe which seems to be the sole objective of the Chancellor's economic policy.
To be fair, however—we have to be fair on these occasions—not every member of the Conservative party is totally out of touch. John Maples seems to have made a rather accurate analysis on many points. The Government would be wise to follow some of his advice—though not, of course, his advice to promote a yob culture in the Commons. The Government would be wise to follow the advice of the deputy chairman of their party to shelve the impending rise in VAT on fuel, as is Labour party policy. They would be wise to tax executive share options—also Labour party policy. They would be wise to recognise that they can never win on the NHS, especially when they promote increased bureaucracy. They would also be wise to recognise that
Reversing Labour's 39 per cent. poll lead on education issues will be tough … talk of competition, budgets, management … triggers negative perceptions of treating education like a business.
The hon. Member for Aldridge-Brownhills (Mr. Shepherd) said in the Chamber a short while ago that many Conservative Members had been trying to get the Maples message through to Ministers but had so far failed. Perhaps they need to try harder. I heard the hon. Gentleman say that he wanted to stand by his election promises on the EC but that he has been threatened with withdrawal of the Conservative Whip if he does not line up and vote with the Government on Monday. I noted that comment with interest. We so often hear how Government Back Benchers intend to rebel, but I fear that on Monday, when it comes to the crunch, they will back down once again.
We are told in the Gracious Speech that the Government
will continue to implement policies and programmes responsive to the needs of the individual citizen, in line with the principles of the Citizen's Charter.
That passage has received little attention from Conservative Members. I have listened to much of the debate over the past week and I am left wondering whether Conservative Members even remember that we have a citizens charter. I have not heard them praising it.
The charter must be the fastest evaporating policy that any Government have ever introduced. Conservative Back Benchers realise, if Ministers do not, that the Government have made a joke out of the word "charter". Yet on Monday the Chancellor of the Duchy of Lancaster boasted that there are now 42 charters. The Government's citizens charter unit is so impressed with that fact that it does not

even hold a copy of each of the charters, although that is perhaps not surprising when we consider how little the charters have delivered.
A cones hotline was set up costing £120,000. Yet it receives fewer than 30 calls a day. That, again, is perhaps not surprising in view of the quality of information on offer. A reporter from The Daily Telegraph who phoned to complain about cones choking the A21 was told that they were presumably there because of road works. As taxpayers, we are paying £120,000 for that sort of information. What a waste.
The Department of Education has not fared much better. When parents went to collect their child benefit at Post Offices this summer, they were handed a Government leaflet on school tests. A parliamentary question revealed that the Department was paying the Post Office £99,000 for that service. The leaflets were also being handed out at Argos stores and goodness knows where else. Ministers were so proud of the leaflets that they have now been withdrawn. Again, what a waste.
Ministers need to learn that charters have contributed to the cynicism of which they complain. The same is true of Government waste. Indeed, waste has become one of the most obvious features of the Government. Even today the President of the Board of Trade is sending out propaganda videos and wasting taxpayers' money. The right hon. Gentleman is sending them to every Member of this place. That is typical of the Government's priorities. They choose to spend money on propaganda videos, for example, rather than on the real issues.
Under the Tories, we have seen a waste of resources. Up to 1994, £125 billion of North sea oil revenues have been wasted. At the same time, investment in manufacturing industry is less now than it was in 1979.

Mr. John Butterfill: Will the hon. Lady give way?

Mrs. Taylor: No, I have to finish in a moment.
We have had a waste of talent and of the potential of our people. That is what is so obscene about the Government.
The Chancellor and other Conservative Members have talked again today about wanting to bring public expenditure down. Yet the Queen's Speech does not even address the basic problem of public expenditure—the high cost and the waste of the public money that the Government are having to spend on unemployment. The Queen's Speech does not deal with that. Instead, its objective is primarily to keep the Tory party together.
The single theme of the Government, the theme that drives all others, is their desperation to be re-elected, at any cost to anyone. They see their re-election no longer as a means of furthering the good of the country, but as an end in itself. They have no policies whatever for the country—only a party survival strategy. That is their most fundamental flaw, worse even than the internal divisions, the policy sidesteps and the U-turns. Not even the sleazy cover-ups and fudges are more important than that.
The Government have lost their direction, their vision and their purpose. The Queen's Speech proves that they are out of touch and out of steam. That is why we shall press our amendment.

The Lord President of the Council and Leader of the House of Commons (Mr. Tony Newton): I see that the hon. Member for Blackburn (Mr. Straw) has not yet been able to return to us tonight, but last Friday, at an earlier stage of the debate, he said that he had read
every speech made by Conservative Home Secretaries to each Conservative party conference since 1979.
He described that as
a numbing experience, but worth it."—[Official Report, 18 November 1994; Vol. 250, c. 253.]
Having studied the rest of the hon. Gentleman's speech, I wondered whether the effect had worn off.
Nevertheless, impressed by the hon. Gentleman's diligence, I engaged in the somewhat similar exercise of reading all the Opposition winding-up speeches in Queen's Speech debates over the same period.

Mr. Archy Kirkwood: We don't believe you.

Mr. Newton: It is true, I promise the hon. Gentleman. I was less lucky than the hon. Member for Blackburn, because in the end I was not sure whether the exercise had been worth it, but it was certainly not entirely without interest. Especially in the light of some of the policies urged in the speech by the hon. Member for Dewsbury (Mrs. Taylor) and some other Opposition speeches, perhaps the interest lay most of all in reminding us how much the world has moved on in the intervening period.
It has not always been the shadow Leader of the House making the winding-up speech. In 1979 it was Albert Booth, a former Secretary of State for Employment, explaining the merits of the industrial relations legislation that had just given us the winter of discontent. In 1981 the late John Silkin, who was much respected on both sides of the House, explained the essential need for Britain to leave the European Economic Community in order to return to exchange controls and import controls. In 1982 it was John Silkin again, declaring that privatisation would destroy British Telecom.
That reminder of a world that now seems so long ago as to be almost beyond memory was one of the interesting things. The second one was the interesting pattern whereby every four years the speech equivalent to the one just made by the hon. Member for Dewsbury had the flavour of winding up, as the right hon. Member for Copeland (Dr. Cunningham) more or less specifically wound up his speech in 1991, with words to the effect of, "We look forward to the next Queen's Speech, because we shall write it." Those speeches were invariably followed a year later by a speech congratulating the new Conservative Leader of the House on his appointment.
Thirdly, I came across something that might interest hon. Members on both sides of the House, a quotation from an Opposition speech again made by the late John Silkin, in 1983. I shall quote—[Interruption.] I hope that the hon. Member for Dewsbury will listen to this. [Interruption.] If I might just have the hon. Lady's attention for a moment, I am about to refer to her in a quite friendly fashion. I shall quote from the equivalent speech in 1983 to the one that she has just made.
The late John Silkin said:
The hon. Member for Bolton, West (Mr. Sackville) paid tribute to Ann Taylor, of whom we are very fond and whom we miss greatly. Unfortunately, I missed the speech of the hon. Member for

Folkestone and Hythe (Mr. Howard), but I understand that it was extremely interesting, and we hope to hear from him again soon."—[Official Report, 29 June 1983; Vol. 44, c. 658.]
Eleven years later, my hon. Friend the Member for Bolton, West (Mr. Sackville) is happily still with us, the hon. Member for Dewsbury has happily been restored to us and the House has fulfilled its wish to hear more from my right hon. and learned Friend the Member for Folkestone and Hythe (Mr. Howard)—now the Home Secretary—most recently, of course, in this debate last Friday.

Mr. Campbell-Savours: May I bring the Leader of the House back to serious matters? He will know that Mr. Patrick Nicholls, a vice-chairman of the Conservative party, resigned tonight following a number of appalling statements that he made about our European partners. Can we presume to have a statement from the Dispatch Box?

Mr. Newton: The hon. Gentleman can assume that there will be ample opportunity to debate European matters within a short space of time.
There is another thing that emerges, which I think the House will want me to get on to. It has become the custom of the Leader of the House in these debates to say a little about House of Commons matters. I have sought to follow that practice, despite early advice from a former colleague to the effect that I should forget all that and get on with bashing the Opposition.
Looking back on my speech on this occasion last year, I see that I was noticeably cautious—rightly, as the intervening year has shown—about the prospects for prompt early moves on modifications to our working arrangements along the lines proposed in the report of the Committee chaired by my right hon. Friend the Member for Westmorland and Lonsdale (Mr. Jopling). I am glad to say, and most—though I know not all—in the House will be glad to hear, that tonight I feel able to be much less cautious on that front to the point at which both I and the hon. Lady, whose endorsement I have for what I am about to say, believe that we are now close to the point at which we can jointly recommend a package of changes to the House.
The House will not expect me to go into full detail tonight, since neither the nature of the occasion nor the time available would make that practicable or appropriate, and many of the report's specific proposals involve the technicalities of our procedures. But I can say that we believe that we can agree on virtually all the specific changes proposed in the report and on achieving its main strategic objectives, although not always precisely along the lines originally proposed.
In particular, we think that the timetabling of most Government Bills, as envisaged by the report, is best achieved by voluntary agreement through the usual channels, rather than by some formal mechanism, which would, in practice, be hard to distinguish from a formal guillotine. Apart from its other merits—most noticeably, the greater flexibility that it allows—that has the merit of reflecting the underlying reality that making the changes work will depend on people wanting to make them work.
I should add that we have agreed that the changes that we hope to propose should be instituted on an experimental basis for the present Session, and that we should review them towards the end of it. The formal changes required at this stage will be provided for, should the House approve them, in sessional orders rather than


by changes to the Standing Orders as such. The orders brought forward would include one to allow the House to choose, if it wished, to exchange some of the business that it now does at other times—including private Members' motions on some Fridays—for equivalent time in sittings on Wednesday mornings, with every effort being made by the business managers to avoid hon. Members being kept here beyond 7 o'clock on Thursdays before non-sitting Fridays.
I hope that the House will welcome that brief report, and one other point that I can make in what I shall call the spirit of Jopling. I am aware that many hon. Members have already registered that Easter next year is very late. They have asked for guidance about what that might mean for any Easter recess. I hope that it will help them if I say that, subject as ever to progress on business, I would anticipate the recess to focus on the week before Easter rather than afterwards.

Mr. Morgan: Before the right hon. Gentleman reaches his characteristically charismatic peroration, may I ask him whether he has had a chance to study the documents that the Chancellor of the Exchequer issued this afternoon concerning European Community financing? Will he take the opportunity before 10 pm to explain the following inconsistency? Last year, the Chancellor announced on page 97 of the Red Book, like a rabbit out of a hat, a cut of £1.3 billion in this year's net financial contribution to the European Community, all of which now appears to have disappeared; if one takes the figures for last year, this year and next year, the contribution to the Community is £1.3 billion higher.

Madam Speaker: Order. Interventions should be short and pertinent to the point.

Mr. Newton: My right hon. and learned Friend the Chancellor was admirably clear in the remarks that he made this afternoon in response to a number of interventions during his speech. Moreover, he made it very clear that the implications of the Edinburgh agreement, for which the European Communities (Finance) Bill provides, are £75 million in the short term and £250 million towards the end of the century. He has repeatedly set out those implications and made them clear to the House.
I have no doubt that, when the hon. Member for Cardiff, West (Mr. Morgan) has had more time to study the document that my right hon. and learned Friend published this afternoon, it will all be clear to him as well.

Mr. William Cash: My right hon. Friend will know that a few days ago my right hon. and learned Friend the Chancellor said on the "Today" programme that the figures I had put forward concerning Community financing were rubbish.

Mr. Kenneth Clarke: indicated assent.

Mr. Cash: I notice that my right hon. and learned Friend still maintains that view, so can my right hon. Friend the Leader of the House explain how it is that a

new piece of information has had to be put in the Vote Office to demonstrate the fact that my right hon. and learned Friend appears to have changed his mind?

Mr. Newton: I do not think that my right hon. and learned Friend has changed his mind. He has simply done what he said this afternoon he had done—he has set out papers to make the position clear in the way that he described this afternoon.
Since the debate on the Loyal Address started, we have had many speeches that have covered the wide-ranging legislative programme. Those speeches have been made from the Front and Back Benches and started with excellent contributions from my hon. Friends the Members for Dartford (Mr. Dunn) and for Aberdeen, South (Mr. Robertson). In the first of those speeches, there occurred one of those exchanges with the hon. Member for Bolsover (Mr. Skinner) which I suspect will stick in parliamentary memories long after the arguments of the day have become hazy.

Mr. Campbell-Savours: What happened?

Mr. Newton: I shall readily remind the hon. Gentleman of what occurred. The exchange was as follows:

Mr. Dennis Skinner: He is a retread.

Mr. Dunn: I heard a pip squeak."—[Official Report, 16 November 1994; Vol. 250, c. 8.]
That is one of those exchanges which I believe deserves to be taken out of Hansard and framed.
In due course, some of the remarks of the hon. Member for Dunfermline, East (Mr. Brown) in relation to education reforms and what the hon. Member for Dewsbury said about the citizens charter might be taken out of Hansard and framed. To be told by the hon. Gentleman that our education reforms have failed, when the Labour Front-Bench spokesman has just announced the Opposition's conversion to a major part of them, and to be told by the hon. Lady that the citizens charter has failed, when education league tables were a key feature of it, practically beggars belief.

Mrs. Ann Taylor: Will the Leader of the House explain why the Secretary of State for Education has dropped league tables for seven, 11 and 14-year-olds and has now said that crude examination league tables at the age of 16 are not useful?

Mr. Newton: That is plain smokescreen stuff. As with almost every previous education reform, the Labour party has spent two or three years denouncing the present reform and has then announced its conversion to it. That has happened this week and the hon. Lady will not divert attention from it.
I wish to pay tribute to a number of speeches in today's debate by Front and Back-Bench Members on both sides of the House. The right hon. Member for Lagan Valley (Mr. Molyneaux) made a speech of impressive dignity and thoughtfulness and paid a generous tribute to the Prime Minister. He drew attention to possibly the most encouraging and important single change since the previous Queen's Speech, which is the new hope of a better future in Northern Ireland, including the hope of a better economic future there.
The speech of my right hon. Friend the Member for Old Bexley and Sidcup (Sir E. Heath) was characteristically wide ranging and went well beyond our narrow domestic concerns. He rightly gave my right hon.


and learned Friend the Chancellor of the Exchequer the credit that he deserves for the substantial improvement in our economy since the equivalent debate a year ago.
Unlike his leader, the hon. Member for Dunfermline, East appears unwilling to acknowledge that an improvement has taken place. The Leader of the Opposition said:
There is recovery and growth, and inflation is low. We welcome that."—[Official Report, 16 November 1994; Vol. 250, c. 20.]
That is another extract from Hansard which could be taken out and framed because it is the first time that the Opposition have acknowledged those very facts. Whether the hon. Member for Dunfermline, East is willing to recognise them, let alone welcome them, they are manifestly the reality.
As my right hon. and learned Friend the Chancellor of the Exchequer reminded us, unemployment is down by nearly 500,000, growth is making us the fastest growing economy in Europe, both this year and next, and underlying inflation is at its lowest for a quarter of a century. As the recovery proceeds, one by one the sound bites of the hon. Member for Dunfermline, East turn round and bite him back. We were told that unemployment would rise and it has not; we were told that we would see a widening trade gap and we have not; we were told that we could not break "stop-go", yet it is steadily becoming clearer and clearer that the economy is now better placed to do just that than at any time in the political lifetime of most of us in the Chamber today.
If Opposition Members do not wish to look at the statistics, they have only to look at the action of overseas manufacturing investors as they vote with their feet to come and do business in Britain. Samsung is only the latest and largest example of a trend which, last year, brought 40 per cent. of all US and Japanese investment in Europe to the United Kingdom. As my right hon. Friend the Prime Minister said in his speech at the outset, it has even brought Black and Decker to the constituency of the Leader of the Opposition.
I shall say this to the House and, not least, to the Opposition, because it picks up the key themes of the Speech on which we are concluding our debate and links back to what I said earlier: those firms would not have come to the Britain of the late 1970s, with its chaotic industrial relations, loss-making nationalised industries, and exchange and import controls extolled in Labour speeches in debates 15 years ago.
At the end of the 1970s under the last Labour Government, those firms—Toyota, Nissan, Fujitsu, Samsung and many others—would not have touched Britain with a bargepole. Moreover, they would not continue to come to Britain under the policies that Labour is extolling today: a minimum wage; a social chapter; and a persistent and insistent intervention in industry. Those companies are here, and those companies will stay, because of the policies which we have pursued and which the Gracious Speech carries forward in a wide-ranging programme of further improvements to the competitiveness of our economy and modernisations to our welfare state.
That programme meets the country's needs, will obtain the support of the House today and will build further on the economic record that is clear for all to see.

Question put, That the amendment be made:—
The House divided: Ayes 266, Noes 312.

Division No.2]
[22.00 pm


AYES


Abbott, Ms Diane
Darling, Alistair


Adams, Mrs Irene
Davidson, Ian


Ainsworth, Robert (Cov'try NE)
Davies, Bryan (Oldham C'tral)


Allen, Graham
Davies, Ron (Caerphilly)


Alton, David
Davies, Rt Hon Denzil (Llanelli)


Anderson, Donald (Swansea E)
Davis, Terry (B'ham, H'dge H'I)


Anderson, Ms Janet (Ros'dale)
Denham, John


Armstrong, Hilary
Dewar, Donald


Ashdown, Rt Hon Paddy
Dixon, Don


Ashton, Joe
Dobson, Frank


Austin-Walker, John
Dowd, Jim


Banks, Tony (Newham NW)
Dunnachie, Jimmy


Barnes, Harry
Eagle, Ms Angela


Barron, Kevin
Eastham, Ken



Battle, John
Enright, Derek


Bayley, Hugh
Etherington, Bill


Beckett, Rt Hon Margaret
Evans, John (St Helens N)


Beith, Rt Hon A J
Ewing, Mrs Margaret


Bell, Stuart
Field, Frank (Birkenhead)


Benn, Rt Hon Tony
Fisher, Mark


Bennett, Andrew F
Foster, Don (Bath)


Bermingham, Gerald
Foulkes, George


Berry, Roger
Fraser, John


Betts, Clive
Fyfe, Maria


Blair, Rt Hon Tony
Galbraith, Sam


Blunkett, David
Gapes, Mike


Boateng, Paul
Garrett, John


Bradley, Keith
George, Bruce


Bray, Dr Jeremy
Gerrard, Neil


Brown, Gordon (Dunfermline E)
Gilbert, Rt Hon Dr John


Brown, N (N'c'tle upon Tyne E)
Godman, Dr Norman A


Bruce, Malcolm (Gordon)
Godsiff, Roger


Burden, Richard
Golding, Mrs Llin


Byers, Stephen
Gordon, Mildred


Caborn, Richard
Graham, Thomas


Callaghan, Jim
Grant, Bernie (Tottenham)


Campbell, Mrs Anne (C'bridge)
Griffiths, Nigel (Edinburgh S)


Campbell, Menzies (Fife NE)
Griffiths, Win (Bridgend)


Campbell, Ronnie (Blyth V)
Grocott, Bruce


Campbell-Savours, D. N.
Gunnell, John


Canavan, Dennis
Hain, Peter


Cann, Jamie
Hall, Mike


Carlile, Alexander (Montgomry)
Hanson, David


Chidgey, David
Harvey, Nick


Chisholm, Malcolm
Hattersley, Rt Hon Roy


Church, Judith
Henderson, Doug


Clapham, Michael
Heppell, John


Clark, Dr David (South Shields)
Hinchliffe, David


Clarke, Eric (Midlothian)
Hodge, Margaret


Clarke, Tom (Monklands W)
Hoey, Kate


Clelland, David
Hogg, Norman (Cumbernauld)


Clwyd, Mrs Arm
Home Robertson, John


Coffey, Arn
Hoon, Geoffrey


Cohen, Harry
Howarth, George (Knowsley N)


Connarty, Michael
Howells, Dr. Kim (Pontypridd)


Cook, Frank (Stockton N)
Hoyle, Doug


Cook, Robin (Livingston)
Hughes, Kevin (Doncaster N)


Corbett, Robin
Hughes, Robert (Aberdeen N)


Corbyn, Jeremy
Hughes, Roy (Newport E)


Corston, Jean
Hughes, Simon (Southwark)


Cousins, Jim
Hutton,John


Cox, Tom
Illsley, Eric


Cunliffe, Lawrence
Ingram, Adam


Cunningham, Jim (Covy SE)
Jackson, Glenda (H'stead)


Cunningham, Rt Hon Dr John
Jackson, Helen (Shef'ld, H)


Dafis, Cynog
Jamieson, David






Janner, Greville
Patchett, Terry


Johnston, Sir Russel
Pickthall, Colin


Jones, Barry (Alyn and D'side)
Pope, Greg


Jones, leuan Wyn (Ynys Mon)
Powell, Ray (Ogmore)


Jones, Jon Owen (Cardiff C)
Prentice, Gordon (Pendle)


Jones, Lynne (B'ham S O)
Prentice, Bridget (Lew'm E)


Jowell, Tessa
Primarolo, Dawn


Kaufman, Rt Hon Gerald
Purchase, Ken


Keen, Alan
Quin, Ms Joyce


Kennedy, Charles (Ross,C&amp;S)
Radice, Giles


Kennedy, Jane (Lpool Brdgn)
Randall, Stuart


Khabra,Piara S
Raynsford, Nick


kilfoyle, Peter
Reid, Dr John


Kirkwood, Archy
Rendel, David


Lestor, Joan (Eccles)
Robertson, George (Hamilton)


Lewis, Terry
Roche, Mrs Barbara


Liddell, Mrs Helen
Rogers, Allan


Litherland, Robert
Ross, Ernie (Dundee W)


Livingstone, Ken
Rowlands, Ted


Lloyd, Tony (Stretford)
Ruddock, Joan


Llwyd, Elfyn
Salmond, Alex


Loyden, Eddie
Sedgemore, Brian


Macdonald, Calum
Sheerman, Barry


Mackinlay, Andrew
Sheldon, Rt Hon Robert


MacShane, Denis
Shore, Rt Hon Peter


Madden, Max
Short, Clare


Maddock, Diana
Skinner, Dennis



Mahon, Alice
Smith, Andrew (Oxford E)


Mandelson, Peter
Smith, Chris (Isl'ton S &amp; F'sbury)


Marek Dr John
Smith, Llew (Blaenau Gwent)



Marshall, David (Shettleston)
Soley, Clive


Marshall, Jim (Leicester, S)
Spearing, Nigel


Martin, Michael J (Springburn)
Spellar, John


Martlew, Eric
Squire, Rachel (Dunfermline W)


Maxton, John
Steel, Rt Hon Sir David


McAllion, John
Steinberg, Gerry


McAvoy, Thomas
Stevenson, George


McCartney, Ian
Stott, Roger


McCrea, Rev William
Strang, Dr. Gavin


McFall, John
Straw, Jack


McKelvey, William
Sutcliffe, Gerry


McLeish, Henry
Taylor, Matthew (Truro)


McMaster, Gordon
Taylor, Mrs Ann (Dewsbury)


McNamara, Kevin
Thompson, Jack (Wansbeck)


McWilliam, John
Timms, Stephen


Meacher, Michael
Tipping, Paddy


Meale, Alan
Turner, Dennis


Michael, Alun
Tyler, Paul


Michie, Bill (Sheffield Heeley)
Vaz, Keith


Michie, Mrs Ray (Argyll &amp; Bute)
Walker, Rt Hon Sir Harold


Milburn, Alan
Wallace, James


Miller, Andrew
Walley, Joan


Mitchell, Austin (Gt Grimsby)
Wardell, Gareth (Gower)


Moonie, Dr Lewis
Wareing, Robert N


Morgan, Rhodri
Watson, Mike


Morley, Elliot
Welsh, Andrew


Morris, Estelle (B'ham Yardley)
Wicks, Malcolm


Morris, Rt Hon Alfred (Wy'nshawe)
Wigley, Dafydd


Morris, Rt Hon John (Aberavon)
Williams, Alan W (Carmarthen)


Mowlam, Marjorie
Williams, Rt Hon Alan (SW'n W)


Mudie, George
Wilson, Brian


Mullin, Chris
Wise, Audrey


O'Brien, Bill (Normanton)
Worthington, Tony


O'Brien,Mike (N W'kshire)
Wray, Jimmy


O' Neill, Martin
Wright, Dr Tony


Oakes, Rt Hon Gordon



Olner, Bil
Tellers for the Ayes:


Orme, Rt Hon Stanley
Mr. John Cummings and


Parry, Robert
Mr. Joe Benton.


AYES


Ainsworth, Peter (East Surry)
Amess, David


Aitken, Rt Hon Jonathan
Ancram, Michael


Alexander, Richard
Arbuthnot, James


Alison, Rt Hon Michael (Selby)
Arnold, Jacques (Gravesham)


Allason, Rupert (Torbay)
Arnold, Sir Thomas (Hazel Grv)





Ashby, David
Fabricant, Michael


Aspinwall, Jack
Fenner, Dame Peggy


Atkins, Robert
Field, Barry (Isle of Wight)


Atkinson, David (Bour'mouth E)
Fishburn, Dudley


Baker, Nicholas (Dorset North)
Forsvth Michael (Stirling)



Baker, Rt Hon K (Mole Valley)



Baldry.Tony
Forsythe, Clifford (Antrim S)


Banks, Robert (Harrogate)
Forth, Eric


Bates, Michael
Fowler, Rt Hon Sir Norman


Batiste, Spencer
Fox, Dr Liam (Woodspring)


Beggs, Roy
Fox, Sir Marcus (Shipley)


Bellingham, Henry
Freeman, Rt Hon Roger


Bendall, Vivian
French, Douglas


Biffen, Rt Hon John



Bonsor, Sir Nicholas
Fry, Sir Peter


Booth, Hartley
Gale, Roger


Boswell, Tim
Gallie, Phil


Bottomley, Peter (Eltham)
Gardiner, Sir George


Bottomley, Rt Hon Virginia
Garel-Jones, Rt Hon Tristan


Bowden, Sir Andrew
Garnier, Edward


Bowis, John
Gill, Christopher


Boyson, Rt Hon Sir Rhodes



Brandreth, Gyles
Gillan, Cheryl


Brazier, Julian
Goodlad, Rt Hon Alastair


Bright, Sir Graham
Goodson-Wickes, Dr Charles


Brooke, Rt Hon Peter
Gorman, Mrs Teresa


Brown, M (Brigg &amp; Cl'thorpes)
Gorst, Sir John


Browning, Mrs. Angela
Grant, Sir A (Cambs SW)


Budgen, Nicholas
Greenway, Harry (Ealing N)


Burns, Simon



Burt,Alistair
Greenway, John (Ryedale)


Butler, Peter
Griffiths, Peter (Portsmouth, N)


Buttetfill, John
Grylls, Sir Michael


Carlisle, John (Luton North)
Gummer, Rt Hon John Selwyn


Carlisle, Sir Kenneth (Lincoln)
Hague, William


Carrington, Matthew
Hamilton, Neil (Tatton)


Carttiss, Michael
Hamilton, Rt Hon Sir Archibald


Cash, William
Hampson, Dr Keith


Churchill, Mr



Clappison, James
Hanley, Rt Hon Jeremy


Clark, Dr Michael (Rochford)
Hannam, Sir John


Clarke, Rt Hon Kenneth (Ru'clif)
Hargreaves, Andrew


Clifton-Brown, Geoffrey
Harris, David


Coe, Sebastian
Hawkins, Nick


Colvin, Michael
Hawksley, Warren


Congdon, David
Hayes, Jerry


Conway, Derek



Coombs, Anthony (Wyre For'st)
Heald, Oliver


Coombs, Simon (Swindon)
Heath, Rt Hon Sir Edward


Cope, Rt Hon Sir John
Heathcoat-Amory, David


Cormack, Patrick
Hendry, Charles


Couchman, James
Heseltine, Rt Hon Michael


Currie, Mrs Edwina (S D'by'ire)
Hicks, Robert


Curry, David (Skipton &amp; Ripon)
Higgins, Rt Hon Sir Terence


Davies, Quentin (Stamford)
Hill, James (Southampton Test)


Day, Stephen
Hogg, Rt Hon Douglas (G'tham)


Deva, Nirj Joseph



Devlin, Tim
Horam.John


Dicks, Terry
Hordern, Rt Hon Sir Peter


Dorrell, Rt Hon Stephen
Howard, Rt Hon Michael


Douglas-Hamilton, Lord James
Howarth, Alan (Strafrd-on-A)


Dover, Den
Howell, Rt Hon David (G'dford)


Duncan Smith, Iain
Howell Sir Ralph (N Norfolk)


Duncan, Alan



Dunn, Bob
Hughes, Robert G (Harrow W)


Durant, Sir Anthony
Hunt, Sir John (Ravensbourne)


Dykes, Hugh
Hunter, Andrew


Eggar, Tim
Hurd, Rt Hon Douglas


Elletson, Harold
Jackson, Robert (Wantage)


Emery, Rt Hon Sir Peter
Jenkin, Bernard


Evans, David (Welwyn Hatfield)
Jessel, Toby


Evans, Jonathan (Brecon)



Evans, Nigel (Ribble Valley)
Johnson Smith, Sir Geoffrey


Evans, Roger (Monmouth)
Jones, Gwilym (Cardiff N)


Evennett, David
Jones, Robert B (W Hertfdshr)


Faber, David
Jopling, Rt Hon Michael






Kellett-Bowman, Dame Elaine
Robertson, Raymond (Ab'd'n S)


Key, Robert
Robinson, Mark (Somerton)


Kiledder, Sir James
Roe, Mrs Marion (Broxbourne)


King, Rt Hon Tom
Ross, Wiliam (E Londonderry)


Knapman, Roger
Rowe, Andrew (Mid Kent)


Knight, Dame Jill (Birm E'st'n)
Rumbold, Rt Hon Dame Angela


Knight, Greg (Derby N)
Ryder, Rt Hon Richard


Knight, Mrs Angela (Erewash)
Sackville, Tom


Knox, Sir David
Sainsbury, Rt Hon Tim


Kynoch, George (Kincardine)
Scott, Rt Hon Nicholas


Lait Mrs Jacqui
Shaw, David (Dover)


Lamont, Rt Hon Norman
Shaw, Sir Giles (Pudsey)


Lang, Rt Hon Ian
Shephard, Rt Hon Gillian


Lawrence, Sir Ivan
Shepherd, Colin (Hertford)


Legg, Barry
Shepherd, Richard (Aldridge)


Leigh, Edward
Shersby, Michael


Lennox-Boyd, Sir Mark
Sims, Roger


Lester, Jim (Broxtowe)
Skeet, Sir Trevor


Lidington, David
Smith, Tim (Beaconsfield)


Lightbown, David
Smyth, Rev Martin (Belfast S)


Lilly, Rt Hon Peter
Soames, Nicholas


Lloyd, Rt Hon Peter (Fareham)
Speed, Sir Keith


Lord, Michael
Spencer, Sir Derek


Lyell, Rt Hon Sir Nicholas
Spicer, Michael (S Worcs)


MacGregor, Rt Hon John
Spicer, Sir James (W Dorset)


MacKay, Andrew
Spink, Dr Robert


Madel, Sir David
Spring, Richard


Maginnis, Ken
Sproat, Iain


Maitland, Lady Olga
Squire, Robin (Hornchurch)


Major, Rt Hon John
Stanley, Rt Hon Sir John


Malone, Gerald
Steen, Anthony


Mans, Keith
Stephen, Michael


Marland, Paul
Stern, Michael


Marlow, Tony
Stewart, Allan


Marshall, John (Hendon S)
Streeter, Gary


Marshall, Sir Michael (Arundel)
Sumberg, David


Martin, David (Portsmouth S)
Sweeney, Walter


Mawhinney, Rt Hon Dr Brian
Sykes, John


McLoughlin, Patrick
Tapsell, Sir Peter


McNair-Wilson, Sir Patrick
Taylor, Ian (Esher)


Mellor, Rt Hon David
Taylor, John M (Solihull)


Merchant, Piers
Taylor, Rt Hon John D (Strgfd)


Mills, Iain
Taylor, Sir Teddy (Southend, E)


Mitchell, Andrew (Gedling)
Temple-Morris, Peter


Mitchell, Sir David (Hants N W)
Thomason, Roy


Moate, Sir Roger
Thompson, Patrick (Norwich N)


Molyneaux, Rt Hon James
Thompson, Sir Donald (C'er V)


Montgomery, Sir Fergus
Thomton, Sir Malcolm


Needham, Rt Hon Richard
Thurnham, Peter


Nelson, Anthony
Townend, John (Bridlington)


Newton, Rt Hon Tony
Townsend, Cyril D (Bexl'yh'th)


Nicholson, David (Taunton)
Tracey, Richard


Nicholson, Emma (Devon West)
Tredinnick, David


Norris, Steve
Trend, Michael


Onslow, Rt Hon Sir Cranley
Trimble, David


Oppenheim, Phillip
Trotter, Neville


Ottaway, Richard
Twinn,Dr Ian


Page, Richard
Vaughan, Sir Gerard


Paice, James
Viggers, Peter


Patnick, Sir Irvine
Waltegrave, Rt Hon William


Patten, Rt Hon John
Walden, George


Pattie, Rt Hon Sir Geoffrey
Walker, A Cecil (Belfast N)


Pawsey, James
Walker, Bill (N Tayside)


Peacock, Mrs Elizabeth
Waller, Gary


Pickles, Eric
Ward, John


Porter, David (Waveney)
Wardle, Charles (Bexhill)


Portillo, Rt Hon Michael
Waterson, Nigel


Powell, William (Corby)
Watts, John


Rathbone, Tim
Wells, Bowen


Redwood, Rt Hon John
Wheeler, Rt Hon Sir John


Renton, Rt Hon Tim
Whitney, Ray


Richards, Rod
Whittingdale, John


Riddick, Graham
Widdecombe, Ann


Rifkind, Rt Hon Malcolm
Wiggin, Sir Jerry


Robathan, Andrew
Wilkinson, John


Roberts, Rt Hon Sir Wyn
Willetts, David





Wilshire, David
Yeo, Tim


Winterton, Mrs Ann (Congleton)
Young, Rt Hon Sir George


Winterton, Nicholas (Macc'fld)
Tellers for the Noes:


Wolfson, Mark
Mr. Sydney Chapman and


Wood, Timothy
Mr. Timothy Kirkhope

Question accordingly negatived.
Amendment proposed, at the end of the Question, to add,
But humbly regret that the Gracious Speech omits measures to promote long-term investment in the country's economic competitiveness and the advancement of individual opportunities; and calls instead for measures to improve the country's performance in education and training, a programme to increase public and private investment and implement a structure for private-public partnership, policies to close the widening gap between rich and poor, reforms to create a more pluralist system of Government and encourage more public participation in decision-making including a system of fair voting, freedom of information legislation and devolution, a strategy for positive and constructive participation in the European Union to promote the country's interests, measures to increase energy efficiency, reduce the use of pollutants and actively promote public transport, and substantive reforms to the Child Support Agency.—[Mr. Ashdown.]

Question put forthwith, pursuant to Standing Order No. 32 (Calling of amendments at end of debate), That the amendment be made:—
The House divided: Ayes 25, Noes 311.

Division No.3]
[22.17 pm


AYES


Alton, David
Maddock, Diana


Ashdown, Rt Hon Paddy
Marek, Dr John


Beith, Rt Hon A J
Michie, Mrs Ray (Argyll &amp;, Bute)


Bruce, Malcolm (Gordon)
Rendel, David


Campbell, Menzies (Fife NE)
Salmond, Alex


Carlile, Alexander (Montgomry)
Steel, Rt Hon Sir David


Dafis, Cynog
Taylor, Matthew (Truro)



Tyler, Paul


Ewing, Mrs Margaret
Wallace, James


Harvey, Nick
Welsh, Andrew


Foster, Don (Bath)
Wigley, Dafydd


Johnston, Sir Russell



Jones, Ieuan Wyn (Ynys Mon)
Tellers for the Ayes:


Kennedy. Charles (Ross.C&amp;S)
Mr. Archy Kirkwood and


Llwyd,Elfyn
Mr. Simon Hughes.


NOES


Ainsworth, Peter (East Surrey)
Bendall, Vivian


Aitken,Rt Hon Jonathan
Biffen, Rt Hon John


Alexander, Richard
Bonsor, Sir Nicholas


Alison, Rt Hon Michael (Selby)
Booth, Hartley


Allason, Rupert (Torbay)
Boswell, Tim


Amess, David
Bottomley, Peter (Eltham)


Ancram, Michael
Bottomley, Rt Hon Virginia


Arbuthnot, James
Bowden, Sir Andrew


Arnold, Jacques (Gravesham)
Bowis, John


Arnold, Sir Thomas (Hazel Grv)
Boyson, Rt Hon Sir Rhodes


Ashby, David
Brandreth, Gyles


Aspinwall, Jack
Brazier, Julian


Atkins, Robert
Bright, Sir Graham


Atkinson David (Bour'mouth E)
Brooke, Rt Hon Peter


Baker, Nicholas (Dorset North)
Brown, M (Brigg &amp; Cl'thorpes)


Baker, Rt Hon K (Mole Valley)
Browning, Mrs. Angela


Baldry,.Tony
Budgen, Nicholas


Banks, Robert (Harrogate)
Burns, Simon


Bates, Michael
Burt, Alistair


Batiste, Spencer
Butler, Peter


Beggs, Roy
Butterfill, John


Bellingham, Henry
Carlisle, John (Luton North)






Carlisle, Sir Kenneth (Lincoln)
Hanley, Rt Hon Jeremy


Carrington, Matthew
Hannam, Sir John


Carttiss, Michael
Hargreaves, Andrew


Cash,.William
Harris, David


Churchill,.Mr
Hawkins, Nick


Clappison, James
Hawksley, Warren


Clark, Dr Michael (Rochford)
Hayes, Jerry


Clarke, Rt Hon Kenneth (Ru'clif)
Heald, Oliver


Clifton-Brown, Geoffrey
Heath, Rt Hon Sir Edward


Coe, Sebastian
Heathcoat-Amory, David


Colvin, Michael
Hendry, Charles


Congdon, David
Heseltline, Rt Hon Michael


Conway, Derek
Hicks, Robert


Coombs, Anthony (Wyre For'st)
Higgins, Rt Hon Sir Terence


Coombs, Simon (Swindon)
Hill, James (Southampton Test)


Cope, Rt Hon Sir John
Hogg, Rt Hon Douglas (G'tham)


Cormack, Patrick
Horam, John


Couchman, James
Hordern, Rt Hon Sir Peter


Currie, Mrs Edwina (S D'By'ire)
Howard, Rt Hon Michael


Curry, David (Skipton &amp; Ripon)
Howarth, Alan (Strat'rd-on-A)


Davies, Quentin (Stamford)
Howell, Rt Hon David (G'dford)


Day, Stephen
Howell, Sir Ralph (N Norfolk)


Deva, Nirj Joseph
Hughes, Robert G (Harrow W)


Devlin, Tim
Hunt, Sir John (Ravensbourne)


Dicks, Terry
Hunter, Andrew


Dorrell, Rt Hon Stephen
Hurd, Rt Hon Douglas


Douglas-Hamilton, Lord James
Jackson, Robert (Wantage)


Dover, Den
Jenkin, Bernard


Duncan, Smith, Iain
Jessel,Toby


Duncan, Alan
Johnson Smith, Sir Geoffrey


Dunn, Bob
Jones, Gwilym (Cardiff N)


Durant Sir Anthony
Jones, Robert B (W Hertfdshr)


Dykes, Hugh
Jopling, Rt Hon Michael


Eggar, Tim
Kellett-Bowman, Dame Elaine


Elletson, Harold
Key, Robert


Emery, Rt Hon Sir Peter
Kilfedder, Sir James


Evans, David (Welwyn Hatfield)
King, Rt Hon Tom


Evans, Jonathan (Brecon)
Knapman, Roger


Evans, Nigel (Ribble Valley)
Knight, Dame Jill (Bir'm E'st'n)


Evans, Roger (Monmouth)
Knight, Greg (Derby N)


Evennett, David
Knight, Mrs Angela (Erewash)


Faber, David
Knox, Sir David


Fabricant, Michael
Kynoch, George (Kincardine)


Fenner, Dame Peggy
Lait, Mrs Jacqui


Field, Barry (Isle of Wight)
Lamont, Rt Hon Norman


Fishburn, Dudley
Lang, Rt Hon Ian


Forsyth, Michael (Stirling)
Lawrence, Sir Ivan


Forsythe, Clifford (Antrim S)
Legg, Barry


Forth, Eric
Leigh, Edward


Fowler, Rt Hon Sir Norman
Lennox-Boyd, Sir Mark


Fox, Dr Liam (Woodspring)
Lester, Jim (Broxtowe)


Fox, Sir Marcus (Shipley)
Lidington, David


Freeman, Rt Hon Roger
Lightbown, David


French, Douglas
Lilley, Rt Hon Peter


Fry, Sir Peter
Lloyd, Rt Hon Peter (Fareham)


Gale, Roger
Lord, Michael


Gallie, Phil
Lyell, Rt Hon Sir Nicholas


Gardiner, Sir George
MacGregor, Rt Hon John


Garel-Jones, Rt Hon Tristan
MacKay, Andrew


Garnier, Edward
Madel, Sir David


Gill, Christopher
Maginnis, Ken


Gillan, Cheryl
Maitland, Lady Olga


Goodlad, Rt Hon Alastair
Major, Rt Hon John


Goodson-Wickes, Dr Charles
Malone, Gerald


Gorrman, Mrs Teresa
Mans, Keith


Gorst, Sir John
Marland, Paul


Grant, Sir A (Cambs SW)
Marlow, Tony


Greenway, Harry (Ealing N)
Marshall, John (Hendon S)


Greenway, John (Ryedale)
Marshall, Sir Michael (Arundel)


Griffiths, Peter (Portsmouth, N)
Martin, David (Portsmouth S)


Grylls, Sir Michael
Mawhinney, Rt Hon Dr Brian


Gummer, Rt Hon John Selwyn
McLoughin, Patrick


Hague, William
McNair-Wilson, Sir Patrick


Hamilton, Neil (Tatton)
Mellor, Rt Hon David


Hamilton, Rt Hon Sir Archibald
Merchant, Piers


Hampson, Dr Keith
Mills, Iain





Mitchell, Andrew (Gedling)
Spring, Richard


Mitchell, Sir David (Hants NW)
Sproat, Iain


Moate, Sir Roger
Squire, Robin (Hornchurch)


Molyneaux, Rt Hon James
Stanley, Rt Hon Sir John


Montgomery, Sir Fergus
Steen, Anthony


Needham, Rt Hon Richard
Stephen, Michael


Nelson, Anthony
Stem, Michael


Newton, Rt Hon Tony
Stewart, Alan


Nicholson, David (Taunton)
Streeter, Gary


Nicholson, Emma (Devon West)
Sumberg, David


Norris, Steve
Sweeney, Walter


Onslow, Rt Hon Sir Cranley
Sykes, John


Oppenheim, Phillip
Tapsell, Sir Peter


Ottaway, Richard
Taylor, Ian (Esher)


Page, Richard
Taylor, John M (Solihull)


Paice, James
Taylor, Rt Hon John D (Strgfd)


Patrick, Sir Irvine
Taylor, Sir Teddy (Southend, E)


Patten, Rt Hon John
Temple-Morris, Peter


Pattie, Rt Hon Sir Geoffrey
Thomason, Roy


Pawsey, James
Tnompson, Patrick (Norwich N)


Peacock, Mrs Elizabeth
Thompson, Sir Donald (C'er V)


Pickles, Eric
Thomton, Sir Malcolm


Porter, David (Waveney)
Thurnham, Peter


Portillo, Rt Hon Michael
Townend, John (Bridlington)


Powell, William (Corby)
Townsend, Cyril D (Bexl'yh'th)


Rathbone, Tim
Tracey, Richard


Redwood, Rt Hon John
Tredinnick, David


Renton, Rt Hon Tim
Trend, Michael


Richards, Rod
Trimble, David


Riddick, Graham
Trotter, Neville


Rifkind, Rt Hon Malcolm
Twinn, Dr Ian


Robathan, Andrew
Vaughan, Sir Gerard


Roberts, Rt Hon Sir Wyn
Viggers, Peter


Robertson Raymond (Ab'd'n S)
Waldegrave, Rt Hon William




Walden, George


Robinson, Mark (Somerton)
Walker Bill (N Tayside)


Roe, Mrs Marion (Broxbourne)
Waller, Gary


Ross, William (E Londonderry)
Ward, John


Rowe, Andrew (Mid Kent)
Wardle, Charles (Bexhill)


Rumbold, Rt Hon Dame Angela
Waterson, Nigel


Ryder, Rt Hon Richard
Watts, John


Sackville, Tom
Wells, Bowen


Sainsbury, Rt Hon Tim
Wheeler, Rt Hon Sir John


Scott, Rt Hon Nicholas
Whitney, Ray


Shaw, David (Dover)
Whittingdale, John


Shaw, Sir Giles (Pudsey)
Widdecombe, Ann


Shephard, Rt Hon Gillian
Wiggin, Sir Jerry


Shepherd, Colin (Hereford)
Wilkinson, John


Shersby, Michael
Willetts, David


Sims, Roger
Wilshire, David


Skeet, Sir Trevor
Winterton, Mrs Ann (Congleton)


Skinner, Dennis
Winterton, Nicholas (Macc'fld)


Smith, Tim (Beaconsfield)
Wolfson, Mark


Smyth, Rev Martin (Belfast S)
Wood, Timothy


Soames, Nicholas
Yeo, Tim


Speed, Sir Keith
Young, Rt Hon Sir George


Spencer, Sir Derek



Spicer, Michael (S Worcs)
Tellers for the Noes:


Spicer, Sir James (W Dorset)
Mr. Sydney Chapman and


Spink, Dr Robert
Mr. Timothy Kirkhope.

Question accordingly negatived.
Main Question put and agreed to.

Resolved,
That an humble Address be presented to Her Majesty, as follows:
Most Gracious Sovereign,
We, Your Majesty's most dutiful and loyal subjects, the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled, beg leave to offer our humble thanks to Your Majesty for the Gracious Speech which Your Majesty has addressed to both Houses of Parliament.

Labour Market

Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wells.]

Mr. David Evans: I did not ask for this debate on instructions from No. 10 or from the Whips Office. If Keir Hardie had not invented the Labour party, Jeremy Beadle would have done. Labour Members surely represent the biggest practical joke ever played on the British people. It might even be funny, if the consequences for the country were not so dire.
I pay tribute to Janus—no, not Janice, but the two-headed Roman god of beginnings, after whom the month of January was named. Janus's two heads enabled him to look back to the past while facing the future. I would like to emulate that technique this evening, as I believe that we need to look to the disastrous conditions of the previous Labour Government before we can fully appreciate the miraculous achievements of the Conservative Government throughout the 1980s and 1990s in setting the foundations for an exciting future which will continue to bring prosperity to the nation.
A trip down memory lane is necessary to inform and warn an ever-growing section of the electorate who are too young to remember the Frankenstein horrors of the previous Labour Government, although the right hon. Member for Sedgefield (Mr. Blair) is a passable imitation of the real thing from Count Dracula's castle—he certainly scares me—and so have little understanding of the reality of voting Labour.
To enable the Government to focus on a policy for the labour market today, they had to consider what happened during the late 1970s. Even to this day, the scars are visible for all to see. No one will forget—that lot over there would like us to forget—the previous Labour Prime Minister, having returned from a trip to sunny Barbados in January 1979, saying, "Crisis—what crisis?" The crisis, which everyone except he and his Cabinet could see, was only too evident. I could give a hundred reasons to highlight that fact, but, for the purposes of this debate, I will focus on 10.
One: rats as big as cats were running around Leicester square, where the capital's refuse was being dumped because members of the Transport and General Workers Union, supported by their sponsored Labour Members of Parliament, refused to collect the rubbish.
Two: the dead lay unburied outside our cemeteries because the TGWU, supported by sponsored Labour Members, refused to dig the graves or to let the corpses cross the picket lines.
Three: patients were not admitted to hospitals, nor were vital drugs and medicines allowed in, because the National Union of Public Employees and the Confederation of Health Service Employees, again supported by sponsored Labour Members, said no. Our reforms have meant that, every week, 40,000 more patients are treated in the national health service than was the case in 1979—instead of 40,000 more union meetings.
Four: we have to remember, too, the humiliation of the Chancellor of the day, a certain Denis Healey, who boasted that he would turn the economy round. The only thing he turned round was the 747 taking him to America, because on that morning the International Monetary Fund, or, as I call it, the receiver, had refused to lend the United

Kingdom any more money. In other words, we were bust, with our name being dragged through the gutters of Europe, and our national pride gone. Under Labour, Great Britain did not mean Great Britain, it meant "gone bust".
Five: who can believe now that, in 1979, one was allowed to take only £50 per year out of the country to go on holiday? Labour believed that, if it allowed any more to be taken out, it would all go overnight to foreign countries, where people's money would be safe and not subject to the ravages of inflation in the United Kingdom. While we are talking about £50, who did not pay the pensioners their £50 Christmas bonus when they were in power?
Six: who can believe now that, under the last Labour Government, inflation reached a peak of 27 per cent., and that, on a weekly shopping trip, every can of beans had acne? It was possible to peel off four or five price increase stickers—and that was just in one week.
Seven: when the hon. Member for Bolsover (Mr. Skinner)—or is it Belgravia?—regularly talks about closing pits and sacking miners, roared on by his colleagues, he should remember that facts are facts. The Labour Governments of 1964–70 and 1974–79 closed 313 pits—[Interruption.]

Madam Deputy Speaker (Dame Janet Fonlies): Order. We could do with a little more quiet.

Mr. Evans: —with the loss of 205,700 jobs. Between 1974 and 1979, the Labour Government were committed to expanding the market for coal; in fact, output fell by 16 per cent.in that period, from 142 million tons to 119 million. A former Labour Energy Minister, now Lord Marsh, said on 20 October 1992:
We genuinely believed that with a benevolent mixture of good intentions and massive subsidies we could reverse"—
I repeat: reverse—
the market trend.
My Lords, we completely misled ourselves and them."—[Official Report, House of Lords, 20 October 1992; Vol. 539, c. 692.]
By "them" he meant the miners.
Eight: what was the higher rate of tax in 1979? With the higher rate now at 40 per cent., it seems inconceivable to us now Was it 50 per cent.? [HON MEMBERS:"Higher."] Was it 60 per cent.? [HON. MEMBERS:"Higher."] Was it 70 per cent.? [HON. MEMBERS:"Higher."] Was it 80 per cent.? [HON. MEMBERS:"Higher."] Was it 90 per cent.? [HON. MEMBERS:"Higher."] Was it 95 per cent.? [HON. MEMBERS: "Higher.] Was it 98 per cent.? [HON. MEMBERS: "Unbelievable!"] And some of us actually managed to pay 103p in the pound.
Nine: the present leader of the Labour party tries to rewrite Labour's history in order to keep up with our agenda, having to eat his words daily. Over the past 20 , years, his party has changed its mind no fewer than eight times over whether we should be in or out of Europe, and pledged allegiance to a non-nuclear defence policy. It is funny how people and times change—or is it promotion that does it?
With regard to Europe, it is worth mentioning that every member of today's shadow Cabinet, as a Member of Parliament in 1972, voted against British entry. On defence, even at this year's Labour party conference—

Madam Deputy Speaker: Order. Before the hon. Gentleman continues, may I point out that the choice of


topic was his, that topic being Government policy. To me, that did not suggest past Government policies. I think that the hon. Gentleman should now come to the title of his Adjournment debate.

Mr. Evans: Forgive me, Madam Deputy Speaker. I am trying to paint a picture—

Madam Deputy Speaker: Order. I know very well what the hon. Gentleman is trying to do; I am saying that he must come to the point.

Mr. Evans: People today do not believe that 13 million days were lost under Labour in the 1970s owing to strikes, as against just under half a million lost in 1993.
Those are some of the reasons why Labour lost the general election in 1979; lost the general election in 1983; lost the general election in 1987; and lost the general election in 1992. Labour has played four and lost four. Even Graham Taylor had a better record than that as manager of the England football team.
It is a simple rule of government that, in order to fight unemployment and develop the conditions for growth, investment and job creation, it is vital that the strategy towards the labour market is built upon the foundations of solid and sensible economic policies.
The next time that that lot on the Opposition Benches have the audacity to criticise the Government's economic policy, I should like to play to them the video of the winter of discontent—strikes, inflation, taxes and misery, the four corners of socialism throughout the world.
Since 1979, it has been the task of Conservative Governments to pick up the pieces from the socialist suicide of the seventies. We like a challenge. We leave that lot on the Opposition Benches to do the whingeing. We get on with the job—and what is more, we deliver. Conservative Governments' top priority has been to reduce inflation so that business can have a firm and steady basis on which to plan and invest. We delivered.
In 1993, inflation remained below 3 per cent. for 12 months, the first time that that has happened since 1960. Inflation currently stands at 2.4 per cent., the lowest it has been for 30 years. Compare that with our international competitors. In Germany, inflation stands at 3 per cent. and in Italy it is 4.1 per cent.
We cut taxes to encourage enterprise and initiative. Since 1979, the basic rate of income tax has been brought down from 33p to 25p. Beer and sandwiches at No.10 are gone for ever. Since 1979, exports have risen by three quarters. By taming the unions, we have got the country working again, and working hard. The United Kingdom rose to the top of the productivity growth league in the 1980s, having been at the bottom in the 1960s and 1970s.
Manufacturing industry has been transformed under Conservative management. Britain is now an international leader in key sectors, such as pharmaceuticals, chemicals and telecommunications. It was only by defeating the unions that we could regain Britain's position as an industrial world leader and give British management the confidence, freedom and incentive to manage properly and professionally.
Nowadays, when one mentions unions, there is an eerie silence on the Opposition Benches. That silence is caused by confusion. On the one hand, the unions still give

Opposition Members a nice juicy pay cheque at the end of each week. Every Member of the shadow Cabinet is sponsored by a union. They have a cheek to talk about sleaze. What is more sleazy than a block vote or a late night shop stewards' election? Labour party policy emanates from their back pockets.
On the one hand, the unions are still Labour's paymasters, but on the other hand there is the so-called "new look" Labour party, led by the right hon. Member for Sedgefield, who looks more like a ladies' hairdresser than a credible statesman. He lacks only a velvet jacket and a pouffy buttonhole to become the Teazy-Weazy of the trade unions.
That has resulted in a form of political schizophrenia. When addressing a conference of business men, the Labour leadership, Mr. Trade Union Teazy-Weazy promises not to amend trade union laws that we have established, but when the deputy leader addresses the unions, he talks of taxing the undeserving rich, of minimum wages and of reforming Tory laws. Like Janus, they face both ways. If fact, if one compares the Labour leader's speeches with those of the deputy leader, it is difficult to tell whether they are on their janus or their anus. Will the real Labour party please stand up, or is it too late?
The Conservative party's policy on the labour market is the one that delivers the goods. Unemployment in Britain fell again last month by 45,000 to 2.5 million. That marked the eighth successive monthly fall, and fits into a consistent downward spiral in unemployment since 1992.
Our achievement in the labour market compares very favourably with that of our European counterparts. For example, unemployment in the United Kingdom is 8.9 per cent. That is well below the rate in France, which is 11.3 per cent. It is 12 per cent. in Italy and a staggering 21.8 per cent. in Spain. It is worth noting that Spain has a minimum wage. Need I say more?
Throughout the 1980s, the Conservative Government saw the importance of providing the nation's children with an education to equip them with the skills that they would need to enable them to compete in a future labour market. About £2.8 billion a year is spent by the Government on training, enterprise and vocational education. That is two-and-a-half times more in real terms than under Labour in 1979.
In addition, spending per pupil under the Conservatives has risen by 47 per cent. in real terms since 1979 Spending on books and equipment has risen by 31 per cent. in real terms since 1979. Average teachers' pay has risen by 57 per cent. on the same basis since 1979.
Conservative reforms and policies have worked. That is plain for all to see. In Europe, 40 per cent. of all inward investment comes to Britain. Foreign companies are flooding into Britain to take advantage of our sound eonomy, our low taxation and the skills of our honest work force.
Britain, the poor man of Europe in the 1970s—there was the brain drain, when all our best doctors, business men and scientists left for foreign parts— has become the investment magnet of Europe. How can that lot over there on the Opposition Benches seriously question anyone on economic policy when they remain committed to clause IV? Their commitment to nationalisation shows that, despite the recent influx of slick party political broadcasts,


sober soundbites and cheesy grins, there still lurks a union boss behind every Labour leader— the string of the Labour party puppet.
Try as he might to get his so-called new-look team to be taken seriously, the right hon. Member for Sedgefield cannot teach his old dogs new tricks, especially when they are kept on a tight Transport and General Workers Union lead, housed in a Trades Union Congress kennel and allowed to eat from a GMB bowl.
The Conservative party is the party of the people. The British people vote Conservative because their vote is returned with a guarantee. We shall deliver.
In the second quarter of 1994, gross domestic product grew by 3.7 per cent. when compared with the same period last year. According to the European Commission— not a source I tend to quote too often— in 1994–95, GDP in the United Kingdom is set to grow faster than in any other EC country.
Politics is about delivering the goods; we have done that. Consumer goods are the layman's thermometer for assessing wealth. Since 1979, the number of households with a washing machine has risen by 14 per cent; with a car, by 16 per cent; with central heating, by 48 per cent. We have injected initiative. enterprise and opportunity into the economy. That has resulted in growth, success and jobs.
How dare that lot over there challenge our record in the labour market when they are financially bound to the unions, chained to clause IV and committed to the suicidal social chapter? Even when taken together, they have less employment and economic experience than a bingo caller.
A Labour Government would allow every man, woman and child in great Britain to participate in the biggest lottery ever seen. The lottery would be based on which policy they implemented first. Would it be higher inflation, higher taxation, crippling national debt or trade union terrorism— in other words, a lottery from hell? It is a lottery ticket that the people of Great Britain must not be allowed to buy.

The Parliamentary Under-Secretary of State for Employment (Mr. James Paice): rose—

Hon. Members: Answer.

Mr. Paice: Madam Deputy Speaker, if only I could answer in a way adequate to deal with the inimitable style of my hon. Friend the Member for Welwyn Hatfield (Mr. Evans)—a style of which we in the House are proud, and of which we know that Janice is also proud.
I start by congratulating my hon. Friend on achieving the debate. He is right to recall the situation in the 1970s, against which the electorate rebelled so decisively in 1979. When we examine the labour market, we must start with one fundamental belief: Governments do not create jobs. Jobs come from businesses producing goods and services at a price and of a quality that people want. My hon. Friend knows that from his own successful business career. Government's role is to provide the right framework for enterprise to flourish, and that is what we are doing.
As my hon. Friend has said, inflation is low, well below the average of our European competitors. We are now in a third year of economic growth, with GDP at its highest level ever. Manufacturing output is 4 per cent. higher than

a year ago, and we have the fastest industrial production of any major industrial country. Export volumes are up 12 per cent. on a year ago, and the Organisation for Economic Co-operation and Development and the International Monetary Fund predict that the United Kingdom will have the fastest growing major European Community economy this year. The policies are working.
As my hon. Friend also said, United Kingdom unemployment has fallen again, and is now below 9 per cent., down by 450,000 since the recovery in the labour market began. That fall began much earlier in the recovery than in any pervious economic cycle. It did so because we have a flexible labour market. Flexibility delivers jobs. The least regulated countries are also those with the best record on job creation.
The United States and Japan not only have fewer people out of work than most European countries; they also have more people in work. Only a handful of European countries can match their record, and those countries, such as the United Kingdom, are also among the least regulated. We have a higher proportion of our work force in employment than any other major EC country. Unemployment is falling faster here than in any other member state. Youth unemployment stands at 13.1 per cent, compared with an EC average of 19.4 per cent.
Perhaps most important are the findings of a survey by the EC Commission—not the one to which my hon. Friend referred—showing that 27 per cent. of employers in Europe regard inflexibility as a very important deterrent to recruitment. The figure for the United Kingdom was 10 per cent., the lowest in any member state.
Our aim is to minimise the burdens on business, while at the same time safeguarding employees and the public. We have transformed industrial relations and labour market flexibility since those days that my hon. Friend recalled. Strikes are now at the lowest levels since Queen Victoria was on the throne, and our strike rates are among the lowest in all industrialised countries—lower than those in Germany, France and the United States. We ended the closed shop; we got rid of the dock work labour scheme; we have created trade union democracy, and given power back to union members.
The Government are not interested in a low-wage economy. Nobody seriously believes that we can compete on wage rates with the Pacific rim. We want a high-skill, high-tech, high-productivity economy, because that will lead to high wages but to low unit wage costs. In the past 20 years, unit labour costs in manufacturing have risen by almost 200 per cent. in Europe. In Japan, they have risen by about 30 per cent.
The Government's policies are reversing that trend, and keeping non-wage costs down. Unit wage costs in manufacturing are now down by 1.4 per cent. on last year. Productivity in manufacturing is up by 6 per cent. on last year, and labour costs as a percentage of total hourly costs are lower than all of our major competitors.
But there are threats to those great achievements. There is not just the vague and remote possibility of a Labour Government, to which my hon. Friend referred and properly put into context, but the threat of new regulations and burdens at European level. That is why the Government chose, rightly, to keep out of the social chapter.
Let me make it clear that we do not really mind if businesses want to set up works councils, or if businesses want to give workers three months' or three years' parental leave, but we do mind if they are forced to do so. It is for businesses to decide, not Europe, or, in most cases, Westminster.
We have in this country a solid framework of protection for workers in health and safety, sex and race discrimination, trade union membership or non-membership and rights against unfair dismissal. But beyond that framework, we believe that employers and employees should be left to decide which arrangements suit their individual needs.
I referred to a high-skill economy. The main responsibility for training still rests with employers. It is estimated that UK employers spend more than £20 billion a year on training. A CBI survey only last month showed a substantial increase in the percentage of manufacturing firms expecting to increase training, compared with last year.
The centrepiece of our strategy is the "investors for people" initiative, to encourage employers to invest effectively in the skills needed for business success. It aims to improve business performance by linking training and the development of employees to business objectives.
Britain used to lag behind the rest of Europe in education and skill levels. We have done much to change that. More than 70 per cent. of 16-year-olds, and more than 55 per cent. of 17-year-olds are now in full-time education, compared with just 42 per cent. and 29 per cent. respectively in 1979. Training people in work has

increased sharply during the past decade. In spring of this year, 79 per cent. more people received job-related training than in spring 1984.
We have not forgotten the unemployed. Listening to the Opposition, one could believe that "the unemployed" were one large homogenous mass. They are not—they are 2.5 million individual people, each with his own needs and expectations. Some need skills, some need motivation, some need literacy and numeracy, and some need to learn how to apply for a job. That is why my Department has a large menu of options for the unemployed, and it is why around half of those who become unemployed leave the count within three months, and two thirds leave within six months.
We have developed national vocational qualifications and modern apprenticeships to drive forward the skills needs of our country. Together with the changes in the labour market brought about by the experiences which my hon. Friend recalled, we are equipping Britain with a work force for the future.
I read today that the hon. Member for Peckham (Ms Harman) said that the Labour party plans to make the Department of Employment a "driving force" for a more competitive and dynamic economy. I have news for her—she is years behind the times, as my hon. Friend described. This Government and this Department, of which I am proud to be Minister, is already there. We are pushing forward the skills frontiers of Britain and pursuing flexible labour market policies to get unemployment down.
My hon. Friend has done the House a major service in allowing us to recall and recount just how far we have come during the past 15 years, and just how much we have achieved in that time. The House should he grateful for his contribution.
Question put and agreed to.
Adjourned accordingly at two minutes to Eleven o'clock.